Alibaba slips after record IPO debut

Alibaba Group Holding slipped in its second day of trading yesterday after jumping almost 40% in its debut as bankers boosted the size of the Chinese e-commerce company’s share offering to a global record of $25bn (€19.5bn).

The company, which priced its initial public offering at $68 a share, raised $21.8bn before underwriters exercised a so-called greenshoe option to increase the size 15% on strong demand.

The Hangzhou company’s first-day surge was the biggest price increase for an IPO of at least $10bn.

Chinese companies trading in the US slumped along with stocks in Hong Kong and Shanghai after finance minister Lou Jiwei said the government won’t make major policy changes in response to economic indicators, dashing stimulus speculations after August data signalled a slowdown.

“The valuation at $68 IPO price was extremely favourable, and after having such a big move, some people took profits,” said Bradley Gastwirth, chief executive at research firm ABR Investment Strategy.

“The market as a whole is getting hit today. Certainly the China economic policy, if there isn’t going to be more stimulus in the near term, is a concern.”

Alibaba’s dominance over a booming e-commerce industry in a country of 1.36bn people attracted interest from money managers including Fidelity Investments, BlackRock. and T Rowe Price Group, who each asked for at least $1bn of shares.

The Hang Seng China Enterprises Index tumbled 1.7% to a two-month low of 10,597.30. The Shanghai Composite Index declined 1.7% to 2,289.87, halting a three-day advance.