Alibaba’s Hong Kong IPO ‘could pave the way’ for mainland Chinese investors to enter – Alibaba Gr Hldgs (NYSE:BABA)

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

“Based on Southbound Connect’s semi-annual reviews and listing adjustment dates (September/March each year), we believe Alibaba’s primary listing (from secondary listing) in Hong Kong by the end of August may pave the way for potential listing in Southbound Connect in early September,” said analyst Ronald Keung.

Goldman Sachs continues to monitor Alibaba’s significant shareholder return policies, such as the repurchase of $10.6 billion worth of shares in the first half of 2024.

In addition, customer management revenue growth due to upgrades in adtech tools and recently charged software service fees is expected to stabilize earnings in the second half of fiscal 2025, narrowing the gap between gross merchandise value and customer management revenue, which could lead to a recovery in revenue growth, he said.

Also read: Nvidia, Alibaba, Jumia Technologies, Chipotle, Tesla: Why these 5 stocks are on investors’ radar today

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

Goldman Sachs maintains its buy recommendation for Alibaba.

On Friday, Alibaba Group announced that it would change its listing status in Hong Kong, a strategic move that will allow the technology giant to offer shares to the 220 million investors on the mainland Chinese stock exchange.

With this new designation, Alibaba shares will be eligible for the cross-border investment channel Stock Connect. The Shenzhen and Shanghai stock exchange operators will review additions to the program on September 5. If approved, mainland investors could begin trading Alibaba shares as early as September 9.

Price promotion: Alibaba rose 3.14% to $85.53 at the time of publication on Friday.

Read now:

Photo: Shutterstock