On September 9th, the Shanghai Stock Exchange and Shenzhen Stock Exchange announced that Alibaba-W (09988.HK) has officially been included in the Hong Kong Stock Connect, effective from September 10th, 2024.
According to a notice issued by the Shanghai and Shenzhen Stock Exchanges, the list of Hong Kong Stock Connect targets has been adjusted due to the implementation of component stock adjustments in the Hang Seng Composite Large Cap Index, Medium Cap Index, and Small Cap Index, and will take effect from the next trading day of the Hong Kong Stock Connect.
Interface News reporters noticed that overall, 33 stocks including Alibaba W, Chabaidao (02555. HK), Cloud Music (09899. HK), and SF Express (09699. HK) have been transferred this time. At the same time, 33 stocks including Baolong Real Estate (01238. HK), Xiabu Xiabu (00520. HK), Huili Group (00806. HK), and Bohai Bank (09668. HK) were withdrawn.
Just recently, on September 4th, Hang Seng Index Company announced the addition of rapid inclusion rules to the Hong Kong Stock Connect Index, which is also considered a positive measure for Alibaba. For securities that qualify for Southbound Interconnection trading due to their conversion from a secondary listing to a primary or dual primary listing, Hang Seng Index Limited will conduct a rapid review of the securities. On the first day of eligibility for interconnectivity, if the closing total market value of the eligible securities ranks among the top 10 existing constituent stocks, the securities will be included in the index or otherwise specified in the next regular monthly adjustment.
According to Wind data, based on the market value at the close of September 9th, Alibaba still ranks sixth.
On August 28th, Alibaba announced that it has officially completed its dual primary listing in Hong Kong, becoming a company listed on both the Hong Kong Stock Exchange and the New York Stock Exchange. The company's ordinary shares listed on the Hong Kong Stock Exchange and American Depositary Shares listed on the New York Stock Exchange are continuously convertible.
Analysis suggests that dual primary listing means that even if a company is delisted from the US stock market, its Hong Kong stock can still be traded; But secondary listing is different, that is, once the company is delisted in the United States, its listing status on the Hong Kong stock market will be uncertain. This means that Alibaba has completed a dual major listing, which has also cleared obstacles for entering the Hong Kong Stock Connect.
China Merchants Securities pointed out that it is expected that passive funds related to Alibaba's entry into the market will form buying orders due to component stock adjustments, while southbound funds may actively allocate, which is expected to bring liquidity improvement.
Goldman Sachs believes that according to the biannual review of the Hong Kong Stock Connect, it is expected that Alibaba's inclusion in the Hong Kong Stock Connect after completing its main listing in Hong Kong may bring a potential net inflow of $15 billion to $16 billion.
According to analysis by CICC, Alibaba's shareholder return has significantly increased since the fiscal year 2024. It is expected that Alibaba's net shareholder return after deducting equity incentives will exceed 8% in 2024 and maintain a high shareholder return in the next 2-3 years; In addition, Alibaba entered the Hong Kong Stock Connect after completing its dual major listings, and it is estimated that the potential long-term increase in southbound funds will exceed HKD 130 billion.
Shen Meng, executive director of Xiangsong Capital, said to the interface news reporter that Alibaba is still one of the most important Internet companies in the world, so entering the Hong Kong Stock Connect can give mainland investors an opportunity to participate in sharing Alibaba's development dividends, and also help maintain Hong Kong's status as an international financial center.
Independent stock analyst Cen Zhiyong also pointed out that southbound funds can also buy Alibaba, giving mainland investors an additional investment option.
Qu Fang, a senior investment advisor at Wanlian Securities, told Jiemian News that this move will bring more southbound capital inflows to the company, enhancing its market support and liquidity. Inclusion in the Hong Kong Stock Connect Index will have a positive impact on Alibaba's trading volume, and it is expected that the shareholding of Southbound Funds may remain stable at over 10%, providing great support for the company's long-term value. In addition, Alibaba's market value ranks sixth in the Hong Kong stock market, meeting the criteria for rapid inclusion in the Hong Kong Stock Connect Index. This change is expected to make Alibaba more attractive in the international market and generate stronger recognition among domestic investors.
Qu Fang believes that investors should pay attention to the cyclical fluctuations in the market and the risks that may arise from market reactions after policy implementation when considering investment decisions. Although policy changes have brought benefits, it is necessary to carefully evaluate factors such as Alibaba's performance fluctuations, market environment, and overall macroeconomic impact.
In summary, the introduction of the rapid inclusion rules for the Hong Kong Stock Connect Index indicates that Alibaba will usher in new opportunities in the capital market. Investors should timely evaluate their holding strategies to achieve better investment returns. At the same time, continuous attention to policy changes and market trends will help to better grasp investment opportunities, "Qu Fang said.
According to research by Zhongtai International, Alibaba has faced competitive difficulties in the past few years, with the core issue being the insufficient consumer value created by the platform under ToB positioning. The demand structure changes brought about by "consumption downgrade" are only superficial. As the company realizes the problem and initiates reforms, the platform's competitiveness is expected to improve. At present, it may be difficult to say that the competitive situation has been completely reversed, but the deep underestimation and significantly improved capital allocation have left sufficient safety margins for investment.