Alibaba Group Joins Stock Connect: A Major Milestone for Hong Kong Stocks

Alibaba Group is making headlines by joining China’s Stock Connect programme, a significant development that allows approximately 200 million mainland investors to invest in the US$400 billion e-commerce giant. Starting from Tuesday, Alibaba's shares will be added to the southbound channel of this innovative investment scheme, as confirmed by the Shanghai and Shenzhen stock exchanges. This addition positions Alibaba alongside leading tech firms, such as Tencent Holdings and Meituan, enhancing access to onshore traders.

The potential influx of up to US$12 billion in onshore funds within six months underscores the importance of this move for not just Alibaba's stock but the overall equity market, especially considering its 8.1 percent weighting in the Hang Seng Index. Since the 2020 regulatory crackdown, the company has lost a staggering HK$5 trillion (approximately US$611 billion), resulting in a remarkable valuation shift to around nine times projected earnings. Analysts project a consensus 12-month price target of HK$105.70, suggesting a 35 percent upside from current levels.

The Stock Connect programme is designed to facilitate smoother capital flows, allowing mainland investors to invest in Hong Kong-listed stocks while foreign funds can access onshore equities via a northbound link. The scheme’s success is evident, with mainland trading now contributing to roughly one-third of daily turnover in Hong Kong’s significant US$5 trillion market.