Sept 10, 2024 Chinese e-commerce giant Alibaba Group Holding Ltd’s (BABA) shares in Hong Kong have been made available to mainland Chinese investors for the first time since Tuesday. This move could bring significant investment from the mainland into Hong Kong’s struggling stock market.

The inclusion in the Stock Connect programs, which link the Shanghai and Shenzhen exchanges to the Hong Kong bourse, is expected to attract up to $12 billion from southbound trading over the next six months, according to Morgan Stanley.

These cross-border programs are accessible to mainland investors with at least 500,000 yuan ($70,221) in their stock accounts. The Shanghai-Hong Kong link was launched in 2014, while the Shenzhen-Hong Kong link followed in 2016.

By the end of this year, Goldman Sachs predicts that this move could draw around $2 billion to $3 billion of mainland liquidity.

“The inclusion of Alibaba in the Stock Connect program is appealing because it allows mainland investors to invest in the firm for the very first time,” said Chelsey Tam, senior equity analyst at Morningstar.

Tam noted that Alibaba will likely become popular among mainland investors who value transparency, dividends, share buybacks, and investor communication.

Additionally, China’s market regulator announced in late August that Alibaba had completed a three-year “rectification” process after being fined for monopolistic practices in 2021. Since then, the company’s Hong Kong-listed shares have dropped by over 60 percent.

The inclusion in the Stock Connect program boosted Alibaba’s stock prices by more than 4 percent, closing at HK$81.6 on Tuesday.

Alibaba, based in Hangzhou, Zhejiang province, is a latecomer to the Stock Connect compared to its mainland peers like Tencent and Meituan, as it was previously a secondary listing in Hong Kong. In August, Alibaba upgraded its Hong Kong listing to primary status, allowing it to be added to the cross-border trading program.

With dual primary listings at both the Hong Kong Stock Exchange and the New York Stock Exchange, Alibaba first announced the upgraded plan in 2022 amid an audit dispute between Chinese firms and the United States.

Unlike its secondary listing in Hong Kong since 2019, which allowed for some exemptions from full compliance with the Asian hub’s listing rules, the dual primary listing requires Alibaba to meet the full reporting rules of both marketplaces.

The potential influx of money into Alibaba aligns with mainland investors’ growing interest in the Hong Kong market. According to the Hang Seng Indexes Company, southbound trading via Stock Connect contributed to 14.3 percent of the market turnover in 2023, up 2.6 percentage points year-on-year.