Alibaba’s Stock Connect link shows Hong Kong’s strength as conduit to mainland markets

Hong Kong’s capital market is living up to its role as a “superconnector” between global fund managers and mainland China’s financial markets, with Alibaba Group Holding’s upgraded listing status benefiting investors on both sides of the playing field.

Since joining the Stock Connect scheme on September 10, onshore investors have collected 4 per cent of the public float in the nation’s biggest e-commerce platform operator, co-founder and chairman Joe Tsai said. They also contributed to 15 per cent of the stock’s turnover in less than three months, he added.

Alibaba switched its listing status to dual-primary on August 28 to be eligible for the scheme, giving mainland investors access to one of the nation’s biggest technology success stories. Alibaba owns the Taobao and Tmall platforms and Alipay payment systems. It is also the owner of the South China Morning Post.

“The main advantage of having a primary listing in Hong Kong is that you get access to mainland investors through the Stock Connect programme,” Tsai said during a fireside chat at the Global Financial Leaders’ Investment Summit, organised by the Hong Kong Monetary Authority, on Tuesday. “This brings a lot of liquidity into our stocks.”

Foreign investors had the first opportunity to invest in Alibaba when the group listed its shares in a record-breaking US$25 billion global stock offering in September 2014. The firm floated its shares in Hong Kong via a secondary listing in November 2019, making it easier for investors in the region to buy and monitor its stock.

The Stock Connect scheme, which turned 10 years old this week, allows mainland investors to buy Hong Kong-listed shares within China’s tight capital controls. Foreign investors can also invest in yuan-denominated shares listed on the Shanghai and Shenzhen exchanges via Hong Kong.

“We have our customers and users who are familiar with our products but not familiar with our stock,” Tsai said, noting that more than 90 per cent of its business is on the mainland. “Now the mainland investors can invest in our stock.”