Alibaba jumps 4pc on Connect inclusion

Staff reporter and Bloomberg

Alibaba's (9988) stock jumped over 4 percent yesterday as it attracted HK$8.5 billion of net inflows from mainland investors after it was made directly accessible to them for the first time.

Shares of the e-commerce company were added to the Stock Connect program that links the Shanghai and Shenzhen bourses to the Hong Kong exchange starting yesterday.

The stock closed 4.2 percent higher at HK$81.6 after gaining more than 5 percent at one time. The turnover surged over 1.7 times to HK$16.85 billion from a day earlier, the most since April 2021.

Alibaba saw a total of HK$8.47 billion of net inflows from the connecting schemes with the mainland, according to data from Hong Kong Exchanges and Clearing (0388), which publishes turnover figures for the top 10 traded stocks via the links each day after the close.

Morgan Stanley expects the inclusion will attract US$17 billion (HK$132.6 billion) to US$37 billion worth of southbound net inflows into Alibaba within one year, adding that it sees more near-term catalysts as the firm completed a three-year regulatory overhaul.

Mainland investors who favor companies with higher levels of transparency, dividends, share buybacks, and investor communication are likely to favor Alibaba over its rival PDD despite the latter having higher growth, according to Chelsey Tam, senior equity analyst at Morningstar.

A call contract that's betting Alibaba to rise another 4.2 percent to HK$85 apiece before September 27 was the most traded option contract yesterday in Hong Kong, according to data from Bloomberg.

Among other Hong Kong-listed stocks being made available to mainland traders yesterday, Mongolian Mining Corp (0975) rose 8 percent. Among stocks being removed from the links, Shimao (0813) plunged 23 percent.