[ccpw id="5"]

Home.forex news reportAlibaba will get a boost from China’s mainland traders

Alibaba will get a boost from China’s mainland traders

-

[ad_1]

Unlock the Editor’s Digest for free

China’s largest ecommerce group has been one of the worst performing stocks in the region in recent years. But up until its 2020 peak, there were long stretches where Alibaba stock delivered handsomely for its shareholders. Alibaba’s 2014 listing in the US meant that mainland Chinese investors — those most familiar with the company’s business — have had to miss out on those stellar returns. Now, they may just turn out to be Alibaba’s last hope of stopping the slide in the stock price.

Alibaba’s shares rose over 5 per cent in Hong Kong on Tuesday after they were made directly accessible to investors in mainland China for the first time. The shares were added to the Stock Connect programme that links the Hong Kong exchange and the Shanghai and Shenzhen markets. It had previously been unable to join thanks to only having a secondary listing status in Hong Kong. Last month, Alibaba upgraded to a primary listing status for Hong Kong which finally meant it could be open to mainland traders.

For foreign investors, holding Chinese tech stocks has lost its lustre over the past four years. A years-long crackdown by Beijing on local tech groups had added significant regulatory risk to the sector. China’s weak consumption recovery has weighed on ecommerce groups, with Alibaba sales missing expectations in the latest quarter. Competition from rivals including Temu owner PDD has been fierce. Alibaba’s shares have fallen nearly three-quarters from their 2020 peak and trade at just 9 times forward earnings, a steep discount to global peers — and a fraction of the over 30 times the group used to trade at before government action started in 2020. The discount has long reflected a fear of the unknown by many foreign investors.

Line chart of Share price (ADR), $ showing Alibaba shares have suffered since Beijing's crackdown

Yet that fear may not deter Chinese locals who are more familiar with the minute details of investigations and shifts in the political mood and consumer sentiment than US investors. And Alibaba has a big edge: as a consumer-facing group and a household name, it will have instant name recognition for millions of retail investors. 

Mainland Chinese retail investors are a formidable force — representing more than 80 per cent of the local trading volume — and are known for their enthusiasm for tech names. That should give Alibaba’s trading volumes a boost, regardless of a weak sector outlook.

june.yoon@ft.com

[ad_2]

Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here

LATEST POSTS

Trade ideas thread – Wednesday, 11 September, insightful charts, technical analysis, ideas

High risk warning: Foreign exchange trading carries a...

ICYMI – Bank of Japan officials see little need to raise the benchmark rate at Sep meeting

Adam posted on this during the US session:Bank of Japan officials see little need to hike ratesThe report comes via Bloomberg (gated) who say:Bank...

Paul Marshall bolsters media baron credentials with £100mn Spectator purchase

Hedge fund boss Paul Marshall has acquired The Spectator for £100mn, pledging to keep the conservative magazine as an independent part of his growing...

This London Man's £2.6M Crypto ATM Scheme Just Blew Up in His Face

The UK's Financial Conduct Authority (FCA) has taken unprecedented action against an individual accused of running an illegal network of cryptocurrency ATMs. As the market watchdog emphasizes,...

Follow us

0FansLike
0FollowersFollow
0SubscribersSubscribe

Most Popular

spot_img