Editor's note: Matteo Giovannini is a finance professional at ICBC in Beijing and a member of the China Task Force at the Italian Ministry of Economic Development. The article reflects the author's views, and not necessarily those of CGTN.

China's e-commerce giant Alibaba this week has formally announced terms for an initial public offering (IPO) on the Hong Kong Stock Exchange. The decision comes after the first attempt of an IPO early this year was stopped due to the instability in Hong Kong.

Alibaba this week has obtained the approval from the Hong Kong Stock Exchange listing committee and it has immediately started a roadshow to present the terms of its offer. The company has plans to set the IPO price on November 20.

After the 25 billion U.S. dollar IPO on Wall Street five years ago Alibaba is now looking to raise around 13.8 billion dollars through a secondary listing on the Hong Kong Stock Exchange. This long-expected secondary listing could become the world's largest issuance in 2019, surpassing the eight billion dollars raised by Uber on the NYSE in April which was the biggest IPO this year, and the largest one for the Hong Kong market since 2010 when the insurance giant AIA raised 17.9 billion U.S. dollars.

The listing in Hong Kong could give people in the Chinese mainland the possibility to invest directly in Alibaba shares due to the Hong Kong-Shanghai Stock Connect, a cross-boundary investment channel that connects the Hong Kong Stock Exchange with the Shanghai Stock Exchange, launched in 2014. 

A dual listing in New York and Hong Kong would permit Alibaba shares to be traded at every hour of the day and this would provide constant trade of shares and opportunities for investors. An IPO in Hong Kong would also provide a diversification of funding for Alibaba in terms of geography and types of investors and a buffer to the shares listed on the NYSE in case of global turmoil due to U.S.-China tensions.

Several stakeholders questioned why Alibaba hasn't decided to list directly on the mainland considering China even launched the STAR Market, a new Nasdaq-style stock exchange created with the intent of attracting tech stars. The technical reason behind this choice is that the A-share market could not be able to absorb an IPO of this size being more than the 10 billion dollars of Agricultural Bank of China Ltd., which listed in 2010 and it is by now the largest-ever domestic listing.

Another reason behind the decision for the listing in Hong Kong at this time is that in the next few days another long-awaited IPO will start. Saudi Aramco plans to go public on the Riyadh Stock Exchange Saudi offering up to five percent at a predicted price of 100 billion U.S. dollars and this would give the company a valuation of two trillion U.S. dollars, making it the largest IPO ever.

According to analysts, it seems that Saudi Aramco plans that after Riyadh could list again and Hong Kong have big chances to be the chosen one. In this way Alibaba would lead this new trend and a success of its IPO would certainly become a major boost for the Aramco listing on the Hong Kong Stock Exchange and would have positive consequences on regaining investors' trust in Hong Kong as a global financial center.

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