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alibaba announced on the hong kong stock exchange in the morning of august 28 that the voluntary change of the company's secondary listing status on the hong kong stock exchange to a primary listing status took effect today. the company is now a company with dual primary listings on the hong kong stock exchange and the new york stock exchange.

bloomberg economics pointed out that alibaba's conversion of dual primary listing in hong kong laid the foundation for its inclusion in the shanghai-hong kong stock connect mechanism, and the inclusion of other stocks has attracted the interest of mainland investors. taking technology peers such as tencent as a reference, alibaba is expected to attract up to us$20 billion in inflows through the shanghai-hong kong stock connect by 2025, accounting for 10% of its issued shares.

10% of alibaba's shares may be traded through the shanghai-hong kong stock connect mechanism

alibaba has lagged behind its peers this year. its inclusion in the stock connect is expected to help expand the potential investor base by making it easier for investors familiar with the company to buy its shares. the proportion of alibaba shares held by investors through the stock connect could be in the low double digits, similar to other tech giants that have been included in the platform. as the dual-primary listing conversion will not involve any new share issuance or fundraising, if investors hold 10% of the current base through the stock connect, it will represent about hk$154 billion (us$20 billion) of potential capital inflows.

all five tech stocks included in the platform have around 10% or more of their shares held by stock connect investors. while tencent's share is only 10%, given its size, that's equivalent to hk$350 billion, higher than other tech peers.

alibaba's hong kong-listed shares' daily average trading volume is expected to rise

average daily turnover of southbound transactions (2014-1h2024)

southbound stock connect trading is expected to be an important factor driving alibaba's hong kong stock turnover, reflecting an overall market trend that mainland funds are becoming increasingly important to the hong kong market amid geopolitical tensions and declining trading volumes. the average daily turnover of hong kong stock exchange main board stocks has fallen to hk$110 billion, compared with hk$127 billion in 2023, while southbound southbound stock connect trading has increased to hk$18 billion during the same period.

southbound trading volume surged, accounting for about 17% of total market turnover, the highest level since the launch of the shanghai-hong kong stock connect in 2014. as mainland china's influence grows, mainland investor confidence may have a significant impact on stocks listed in hong kong.