Alibaba Group Holding Ltd.’s stock experienced a significant boost in Hong Kong trading on Tuesday, rising by as much as 5.2%, marking its largest gain since August 16. This surge follows the company’s inclusion in the Stock Connect program, which links the Shanghai and Shenzhen stock exchanges with the Hong Kong exchange, allowing mainland Chinese investors to buy Alibaba shares directly for the first time.
The move is anticipated to drive substantial inflows into Alibaba, with estimates suggesting about $20 billion in new investment over the coming year. Analysts at Bloomberg Intelligence project that mainland investors could acquire more than 10% of Alibaba’s shares, potentially narrowing the company’s valuation gap with its competitor, PDD Holdings Inc.
Year-to-date, Alibaba’s Hong Kong-listed shares have risen by 7.5%, a contrast to the 9% decline observed in the Hang Seng Tech Index. This inclusion comes at a crucial time for Alibaba, which recently reported a revenue shortfall for the second quarter due to sluggish consumer spending impacting retail sales in China.
Previously, Alibaba was among the major Chinese companies excluded from the Stock Connect program due to its secondary listing status in Hong Kong. However, the company upgraded to a dual-primary listing status for both Hong Kong and New York in August, paving the way for its inclusion in mainland trading.
