Alibaba Group shares gain on hopes of stronger demand from mainland investors

By Jiahui Huang

Alibaba Group shares rose on the Hong Kong stock exchange on expectations that easier access to mainland Chinese investors could boost demand for the e-commerce giant’s shares.

The stock was up 4.7% to 81.95 Hong Kong dollars, equivalent to $10.51, early Tuesday. The stock was the biggest gainer on the Hang Seng Index and outperformed the index, which was last up 0.2%.

The gains came after Hong Kong-based Alibaba Group’s shares were included in the Stock Connect program by the Shanghai and Shenzhen stock exchanges.

Stock Connect is a platform that connects the Shanghai and Shenzhen stock exchanges with the Hong Kong Stock Exchange, enabling mainland Chinese investors to trade eligible Hong Kong stocks.

Daiwa analysts say the inclusion of Southbound Stock Connect will attract new interest in the stock from mainland Chinese investors.

Goldman Sachs analysts in a recent note said Alibaba’s listing could attract around $2 billion to $3 billion in liquidity from mainland China by the end of this year.

Goldman Sachs analysts say the total inflow could reach $11 billion within two to three years, following in the footsteps of liquidity peers Tencent, Meituan and Xiaomi.

Alibaba is the largest by market capitalization among 13 companies with secondary listings in Hong Kong. As of Sept. 9, Southbound’s stake accounted for 10% of Tencent’s total Hong Kong holdings, 14.5% for Xiaomi and 12.8% for Meituan, according to data provider Wind.

Goldman Sachs analysts said that although Chinese stocks have been struggling with liquidity amid tighter market regulations and weak confidence in the country’s economy, net buying in the south of the country was “exceptionally strong.”

Alibaba’s shares in Hong Kong have risen 8.0% this year.

Write to Jiahui Huang at [email protected]

(END) Dow Jones Newswires

September 9, 2024, 11:59 PM ET (03:59 GMT)