ALIBABA (BABA) – Having completed its $25 billion IPO, Alibaba is now focused on extending its Yu’E Bao money market fund into Hong Kong.
Currently one of the most popular online money market funds in China, Yu’E Bao has attracted Rmb574bn ($94bn) within just over a year of launching.
Creating a regional Hong Kong version of the fund will take the Alibaba model out of China but they will want to send the money back to the mainland.
The estimated time of introduction is early next year and to succeed, Alibaba will have to follow two initial stages:
1. Alipay, Alibaba’s financial unit, applies for and gains a banking license in Hong Kong.
2. Alipay gets sign off from mainland authorities to collect money in Hong Kong’s offshore renminbi market and send it back to China.
The company hopes to be able to offer a 4 per cent return as opposed to 1 per cent offered at present, by investing in the mainland and optimizing higher rates available in China.
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