Alibaba Set to Join Stock Connect: A Potential US$12 Billion Market Boost on the Horizon

Starting Tuesday, Alibaba will become a part of the Stock Connect, possibly enhancing the market by US$12 billion. This move could potentially draw up to US$12 billion from local funds into the struggling stock, as per a single prediction.

Alibaba Group Holding is poised to become a part of China's Stock Connect program, a long-anticipated decision that will allow roughly 200 million investors based in mainland China to funnel their funds into the $400 billion online retail conglomerate.

The business's shares listed in Hong Kong will be included in the southbound route of the international investment program starting Tuesday, as per individual announcements made by the Shanghai and Shenzhen stock markets on Monday.

The leading online retail company, headquartered in Hangzhou in the eastern part of Zhejiang province, will be joining other prominent Chinese tech companies such as Tencent Holdings, Meituan, and mobile phone manufacturer Xiaomi in the scheme. Their stocks are already available to local investors via the cross-border investment connections.

The stock's value has plummeted by approximately HK$5 trillion (US$611 billion), which is over 70% of its market worth, following Beijing's regulation of the tech industry in October 2020. The downturn has lowered its valuation to roughly nine times its projected earnings, compared to its usual average of 17 times, as per the data from Bloomberg.