ALIBABA Group Holding’s stock rose in Hong Kong after it was made directly accessible to investors in mainland China for the first time.
Shares of the e-commerce company gained as much as 5.2 per cent, the most since Aug 16. Starting Tuesday (Sep 10), the stock was added to the Stock Connect programme that links the Shanghai and Shenzhen bourses to the Hong Kong exchange.
The highly-anticipated inclusion is expected to attract about US$20 billion of inflows into the stock into next year, with mainland investors likely to build a stake of over 10 per cent in Alibaba, according to Bloomberg Intelligence (BI). That should also help Alibaba narrow its valuation discount to rival PDD Holdings, according to BI analysts.
Shares of the e-commerce firm are up 7.5 per cent in Hong Kong so far this year, compared with a 9 per cent drop in the Hang Seng Tech Index. The inclusion is a timely boost after the company recently reported a revenue miss for the second quarter, as China’s weak consumption continues to sap retail sales momentum.
Alibaba had been one of the few major Chinese stocks that was unable to join the Stock Connect, as it only had secondary listing status in Hong Kong. The company upgraded to dual-primary listing status for Hong Kong as well as New York in August, allowing it to finally be made available for mainland trading. BLOOMBERG
