Shares of the Hong Kong-listed Alibaba Group Holding Limited (HK:9988) soared over 4% as of writing following their debut on China’s Stock Connect program. This program connects Shenzhen and Shanghai stock exchanges with the Hong Kong stock exchange, potentially attracting increased investment in Alibaba’s stock.
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Alibaba is a Chinese technology company known for its online marketplace.
Alibaba Gains from the Stock Connect Program
Alibaba’s addition to China’s Stock Connect program will pave the way for additional investments from Mainland China. The Stock Connect program aims to streamline fund movement despite China’s stringent capital controls. It enables Mainland investors to purchase stocks listed in Hong Kong, while foreign investors can access shares listed on the Mainland through the northbound link. Alibaba joins top Chinese tech giants like Tencent Holdings (HK:0700), Meituan (HK:3690), and Xiaomi (HK:1810) in the program.
Morgan Stanley forecasts that Alibaba stock could attract up to $12 billion in onshore funds within six months. This would be a significant boost for both Alibaba and the broader market, given its 8.1% weightage in the Hang Seng Index.
Earlier in August, Alibaba approved a plan to elevate its Hong Kong listing to primary status. This decision is also expected to attract more Chinese investors and increase domestic market investments. Over the last few years, Alibaba shareholders have raised concerns about the company’s growth outlook due to intensifying competition and economic challenges. Alibaba stock declined by around 30% in 2023. The latest moves could offer investors some relief by opening up new investment opportunities for the stock.
Are Alibaba Shares a Good Buy?
On TipRanks, 9988 stock has received a Moderate Buy rating based on three Buy and two Hold recommendations. The Alibaba share price target is HK$99.90, which implies a growth rate of 27.6% on the current trading price.
