Alibaba’s proposed IPO beneficial

Baron: The exercise will help rekindle investor interest in China Internet companies

NEW YORK: Alibaba Group Holding Ltd.’s planned initial public offering in New York will help Chinese Internet companies from Sina Corp to Baidu Inc to extend rallies, Baron Capital Inc said.

Alibaba, China’s biggest e-commerce company, is seeking US law firms to help with an IPO after talks for a Hong Kong listing broke down following management’s proposal to keep control in a share sale, according to two people familiar with the matter.

Investment banks have valued Alibaba at as much as US$120bil, which would make it the third biggest Internet company behind Google Inc and Amazon.com Inc based on market capitalisation.

“This is going to be the most important e-commerce company IPO in the world next to Amazon,” Michael Kass, a New York- based portfolio manager at Baron Capital Inc, which manages US$20bil in assets including emerging-market stocks, said by phone.

“Look at Baidu and Sina, and Ctrip and all the leading China Internet companies, and investors’ interest is being rekindled in those companies.”

Sina, owner of the Twitter-like Weibo in which Alibaba acquired an 18% stake in April, has jumped 64% this year.

Baidu, China’s most-used search engine, has gained 50% while online fashion retailer Vipshop Holdings Ltd extended its surge to 227%.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the United States, poised for its best quarterly gain in three years with a 19% rise, added 0.4% to 102.2 on Wednesday in New York.

China’s economy could grow between 7% and 7.5% in 2013 and beyond, a level that “will become the new normal,” Standard & Poor’s economist Paul Gruenwald wrote in a report on Wednesday, adding slower expansion would make its growth more sustainable. The world’s second largest economy expanded 7.7% last year and 9.3% in 2011.

China represented the biggest country exposure in the Thornburg Developing World Fund, portfolio manager Lewis Kaufman, whose fund has about US$728mil of assets, said by phone on Wednesday from Santa Fe, New Mexico.

“Consumption can continue to be the buy sector of the Chinese economy. The Internet names and casinos are great places on consumption.”

Melco Crown Entertainment Ltd, a casino operator in Macau, is set for an 89% rally this year, the biggest annual gain in three years.

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the United States, dropped 0.5% to US$37.92 in New York.

The Standard & Poor’s 500 Index slipped 0.3% after Wal-Mart Stores Inc cut orders and as concern grew that a political showdown over government spending poses a threat to growth. — Bloomberg