(Bloomberg) -- Alibaba Group Holding Ltd.’s decision to break its $220 billion empire into six units and potentially list them is spurring hopes of a much needed boost to Hong Kong’s IPO market.

The financial hub’s advantages include easy access for foreign investors, while Beijing’s proximity can ease its policymakers’ concerns about oversight, according to analysts. While other Chinese conglomerates may follow Alibaba’s overhaul, mainland bourses could also attract some potential listings, they said.

“If they are going to provide their existing stockholders the option to subscribe, or if they are going to spin-out these units instead of raising fresh capital, then they might have to do the listing in Hong Kong as not everyone will have access to A-shares market,” said Sumeet Singh, head of equity research, IPOs and placements at Aequitas Research Pvt. 

Hong Kong Exchanges & Clearing Ltd.’s shares climbed as much as 4.1%, outperforming the Hang Seng Index, to touch their highest level in three weeks.   

Initial public offerings by Chinese firms have slumped in Hong Kong and abroad since since mid-2021 as Beijing expanded a crackdown over several large companies and industry groups ranging from technology to education. IPO proceeds since January are 48% lower than at the same time last year, when they slumped 69% from 2021.  

All six units resulting from the break up of Alibaba could be suitable to list in Hong Kong, said Ke Yan, the head of research at DZT Research in Singapore. “I think the mainland regulator prefers them to list in Hong Kong to bring in foreign capital, and also to bring back the confidence of foreign investors.”

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“Given the regulatory overhaul that Alibaba has been through, they will probably look to list the units closer to home,” said Aequitas Research’s Singh.

Additionally, Chinese authorities’ prioritization of capital market reforms to make the fund-raising process more efficient will also support domestic economic growth that benefits companies, according to Sharnie Wong, an analyst at Bloomberg Intelligence.

Revised rules by China’s securities regulator that take effect March 31 could also make mainland listings easier for firms dealing with data deemed sensitive, with Hong Kong seen as the “the preferred destination” for others, said Brian Freitas, an equities analyst who publishes on the Smartkarma platform.

Read More: Alibaba May Signal End to HKEX’s Blockbuster IPO Drought: React

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