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Alibaba priced 710 million new Hong Kong shares at HK$112.70 on 24 August, raising HK$80bn or about $10.2bn. It is the largest primary follow on ever by a Hong Kong listed company and the third largest globally this year, the book ran to roughly three times the offering, and the price was an 8.4% discount to the previous close. On 28 August the shares closed at HK$113.90.
The sequence is the whole argument. HK$123.00 on 21 August, then HK$112.50 on 24 August, down 8.54%, with a low of HK$110.10. Then HK$114.20, HK$116.60, HK$115.50 and HK$113.90. Four sessions on it sits HK$1.20 above the deal price and has not been back to HK$123.00. My read is that the marginal buyer is calling HK$112.70 fair for the enlarged share count, which means the compute budget is being carried at cost rather than paid up for.
Two details are worth getting right, because a lot of the coverage blurred them. The US listing fell only 0.73% on 24 August. Its 8.57% single day fall was on 21 August and it followed the June quarter results, not the placement. And the use of proceeds changed between the two announcements. On 24 August it was all of it to full stack AI capabilities, while the completion announcement filed 26 August splits net proceeds 60%, HK$47,871m, to global compute, and 40%, HK$31,914m, to hyperscale data centres and Agentic Cloud upgrades.
Michael Burry sold his entire position shortly before the raise, wrote that he cannot bless share issuances, said the stock would have to halve for him to return, and argued that return on invested capital keeps falling as AI capital spending climbs. He rotated into JD.com. The dilution here is real, this is new primary stock rather than an existing holder selling down, and it landed while the payback period on that spending was already the open question. I cannot date the quarter in which HK$47,871m of compute turns into cloud revenue, and neither can anyone quoting a target.
That rotation is one I hold both sides of without having chosen to. As of 26 August, Alibaba was the largest position in CNQQ at 9.05% and JD.com was in the same fund at 1.13%. For scope, CQQQ counts A shares at a 25% inclusion factor, and KWEB carries none at all because it is internet focused. It has only been trading since September 2025, which is not much of a record to judge anything on.