Hong Kong’s capital market is fulfilling its role as a ‘super-connector’ between global fund managers and mainland China’s financial markets, with Alibaba Group Holding’s enhanced stock market status benefiting investors on both sides of the playing field.
Since joining the Stock Connect program on September 10, onshore investors have amassed 4 percent of the public stock market capitalization of the country’s largest e-commerce platform operator, according to co-founder and chairman Joe Tsai. They also contributed 15 percent of the stock’s sales in less than three months, he added.
Alibaba switched its listing status to dual-primary on August 28 to qualify for the scheme, giving mainland investors access to one of the country’s biggest tech success stories. Alibaba owns the Taobao and Tmall platforms and the Alipay payment systems. It also owns the South China Morning Post.
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“We have our customers and users who are familiar with our products, but are not familiar with our inventory,” Tsai said during a fireside chat on November 19. Photo: Dickson Lee alt=’We have our customers and users who are familiar with our products but not familiar with our inventory,’ says Tsai during a fireside chat on November 19. Photo: Dickson Lee>
“The main advantage of a primary listing in Hong Kong is that you get access to mainland investors through the Stock Connect program,” Tsai said during a fireside chat at the Global Financial Leaders’ Investment Summit, organized by the Hong Kong Kong Monetary Authority. on Tuesday. “This brings a lot of liquidity to our shares.”
Foreign investors got their first chance to invest in Alibaba when the group listed its shares in September 2014 in a record-breaking $25 billion global equity offering. The company listed its shares in Hong Kong through a secondary listing in November 2019, making it easier for investors in the region to buy and monitor its shares.
The Stock Connect program, which celebrates its 10th anniversary this week, allows mainland investors to buy Hong Kong-listed shares within China’s strict capital controls. Foreign investors can also invest in yuan-denominated shares listed on the Shanghai and Shenzhen stock exchanges through Hong Kong.
“We have our customers and users who are familiar with our products, but are not familiar with our inventory,” Tsai said, noting that more than 90 percent of sales are in the mainland. “Now mainland investors can invest in our shares.”
