Alibaba's Hong Kong Listing 'Could Pave The Way' For Mainland China Investor Access

Alibaba Group Holding Ltd.’s BABA decision on Friday to change its listing status in Hong Kong could mean that the tech giant could be included in the Southbound Bond Connect by early next month, according to a Goldman Sachs analyst.

“Based on Southbound Connect half-yearly reviews and inclusion adjustment dates (Sep/Mar of each year), we believe Alibaba's primary listing (from secondary listing) in HK by end-August could pave the way for potential Southbound inclusion in early Sep.,” said analyst Ronald Keung.

Goldman Sachs continues to see significant shareholder return policies from Alibaba, such as the repurchase of $10.6 billion in shares over the first half of 2024.

It also expects customer management revenue growth from adtech tool upgrades and recent software service fees to stabilize earnings on the second half of fiscal 2025, thus narrowing the gap between gross merchandise value and customer management revenue, which could result in recovery of revenue growth, he said.

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“We continue to believe valuation is attractive,” Keung added. 

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Goldman Sachs maintains a Buy rating on Alibaba.

On Friday, Alibaba Group announced it will change its listing status in Hong Kong, a strategic move that will enable the technology giant to offer shares to the 220 million investors on mainland China's stock market.

This new designation will make Alibaba’s shares eligible for the Stock Connect cross-border investment channel. The exchange operators of Shenzhen and Shanghai will review additions to the program on Sept. 5. If approved, mainland investors could start trading Alibaba shares as early as Sept. 9.

 Price Action: Alibaba gained 3.14% to $85.53 at the time of publication Friday.

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