By Jiahui Huang
Alibaba Group's shares surged in Hong Kong on expectations that easier access to mainland investors may boost demand for the e-commerce giant's stock.
Shares rose 4.7% to 81.95 Hong Kong dollars, equivalent to US$10.51, early Tuesday. The stock was the top gainer on the benchmark Hang Seng Index and outperformed the index, which was recently up 0.2%.
The gains came after Alibaba Group's Hong Kong shares were included by the Shanghai and Shenzhen stock exchanges in the Stock Connect scheme.
Stock Connect is a platform linking Shanghai and Shenzhen stock exchanges with Hong Kong's bourse that allows mainland investors to trade eligible Hong Kong shares.
The Southbound Stock Connect inclusion will attract new buying interest for the stocks from mainland-based investors, Daiwa analysts said.
Goldman Sachs analysts said in a recent note that the inclusion of Alibaba in the stock connect could attract around $2 billion to $3 billion of mainland liquidity by the end of this year.
Over a two to three-year period, total inflows could reach $11 billion, following the liquidity trajectory of its peers Tencent, Meituan, and Xiaomi, Goldman Sachs analysts said.
Alibaba is the largest company in terms of market capitalization among the 13 companies that have secondary listings in Hong Kong. As of Sept. 9, Southbound shareholding accounted for 10% of Tencent's total Hong Kong share, 14.5% for Xiaomi, and 12.8% for Meituan, according to data provider Wind.
Although Chinese equities have faced challenging market liquidity amid stricter market regulations and weak faith in the country's economy, southbound net buying has been "exceptionally strong," Goldman Sachs analysts said.
Alibaba's Hong Kong shares have risen 8.0% so far this year.
Write to Jiahui Huang at jiahui.huang@wsj.com
(END) Dow Jones Newswires
September 09, 2024 23:44 ET (03:44 GMT)
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