'Open sesame' for Alibaba IPO investors on NYSE

By Wu Yiyao (China Daily) Updated: 2014-07-04 08:14

China's capital management services providers plan to offer vehicles so that Chinese investors can buy shares in Alibaba Group Holding Ltd's initial public offering on the New York Stock Exchange, widely seen as an opportunity for high yields.

Harvest Fund Management Co Ltd said it will introduce services to help China's domestic investors buy stocks offered by Alibaba Group, which is launching its IPO on Aug 8, Shanghai Securities News reported on Thursday.

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The vehicle will enable investors to share the yields of the e-commerce giant, according to the Harvest Fund service.

Several other capital management firms and funds have introduced programs to enable Chinese investors to buy overseas-listed stocks through the Qualified Domestic Institutional Investor program. Internet technology companies' overseas-listed stocks are particularly popular among domestic investors.

Alibaba Group is expected to raise $20 billion on the NYSE, according to its latest reports, and it could become the largest IPO in history in terms of funds raised.

Several other overseas-listed Chinese Internet technology companies reported earnings on the first day of listing. The Harvest Fund's service is widely seen as an opportunity for China's investors to share a piece of the huge cake.

Stock prices of download manager Xunlei Ltd gained 24 percent on its first day of listing on the Nasdaq, while Sina Weibo surged 19 percent on its first day, according to data from the Shanghai-based WIND Information Co Ltd, a leading financial information services provider in China.

Other domestic institutions have also been offering asset management products to raise funds in order to invest in Alibaba's IPO.

Shenzhen-based Rongtong Capital Management Co Ltd said it will introduce a program that enables clients to buy Alibaba shares through the firm's QDII program and directly hold the company's shares, which can be traded on the day of the IPO.

"Expected yield of the program is about 120 percent, and the investment period is three months," the program's introduction said.

But there's a catch: Minimum investment in these programs is about 1 million yuan ($161,290), according to prospectus introductions.

Underwriters of the Alibaba Group's IPO are international brokerages, but domestic fund management services may also contribute to the selling of the shares, said Zhang Meilun, a Shanghai-based fund analyst.

"These vehicles may give Chinese investors channels to invest in overseas stocks. Like investing in China's A shares, buying overseas-listed stocks may also expose investors to the risk of loss, and past good performance does not guarantee future yields. Investors need to be well aware of the risks," said Zhang.