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Alibaba's record IPO brings new investment opportunities in China [China Daily: Africa Weekly](China Daily: Africa Weekly Via Acquire Media NewsEdge) A Chinese worker walks past a logo of Alibaba at the headquarters of Chinese e-commerce giant Alibaba in Hangzhou city, East China's Zhejiang province, September 15, 2014. [Photo/IC] NEW YORK - Chinese e-commerce giant Alibaba Group's successful listing on the US market will provide global investors fresh opportunities to share fruits of China's economic growth, analysts said. Alibaba on Thursday set its initial public offering (IPO) price at $68 per share and raised $21.8 billion, making the largest ever IPO in US history. Even though the IPO price is at the ceiling of its expected range of between $66 and $68 disclosed earlier, some analysts think the pricing is still conservative. Henry Guo, senior research analyst at JG Capital, thinks Alibaba should have priced higher at IPO. "Alibaba's fair price could be $95," Guo estimated. After the IPO pricing, everyone is interested to know where Alibaba's stocks will begin to trade. Kenneth Polcari, director of NYSE Floor Operations at O'Neil Securities Inc, said: "I would suspect it from anywhere from 10 or 15 percent move. That would be a substantial move for a deal that size. So 15 percent is about $9 or $10 move." Jack Liu, senior vice president at Chardan Capital Markets, a New York-based investment bank, said: "I think it will be a conservative estimate if Alibaba starts trading at $75 per share." Kevin O'Leary, chairman of O'Leary Funds, is also optimistic. "I don't know if it's going to trade to $100. That sounds a little frothy to me," he told the CNBC. "Alibaba is the first choice for international investors to share fruits of China's development," said Guo. "The company's healthy fundamentals, rapid growth and profit margin have impressed investors." To US consumers, China's Alibaba is a non-entity Ma touts tower of 'BABA' in HK Kenneth said that the market alone in China with some 1.3 billion population is huge and people will look at it almost as a proxy of the Chinese economy. "If you believe in what's happening around the world, if you believe in the transition of the Chinese economy to more of a market economy, I think the potential in the future is very bright," Polcari told Xinhua. O'Leary said they may sell off some of their holdings in other US internet companies to make a full allocation on Alibaba. Analysts are confident about Alibaba's growth prospect but remained cautious about potential risks. "Alibaba has made broad investment in areas like entertainment and media to create an 'Alibaba eco-system,' which will attract more customers. Moreover, Alibaba is also actively exploring international market," Guo said. According to Liu, there is still a long way for China to catch up with the relatively mature US market in terms of Internet penetration, the number of mobile users and Internet consumption. Polcari said Alibaba is looking to expand into the Americas and Europe. If things go as it is expecting, certainly the potential is huge. However, Polcari pointed out the difficulty for Alibaba to expand into territory that its US rival Amazon.com already controls and to win faithful Amazon users to suddenly switch to Alibaba. "So I think it's going to be the competition for sure," Polcari said. Guo warned of potential concerns after the company's IPO. For example, US investors are not familiar with Alibaba's ownership structure, and there are still fake products on Taobao.com, China's largest consumer-to-consumer online trading site. Alibaba, founded by Jack Ma in 1999, is one of the largest e-commerce titans in the world. It controls 80 percent of all online retail sales in China. To US consumers, China's Alibaba is a non-entity Ma touts tower of 'BABA' in HK (c) 2014 China Daily Information Company. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info). |