($) Alibaba (Finally) Gets Its Retail Fanbase
Thanks to Congress and the Holding Foreign Companies Accountable Act
This is premium member only content. Thank you for being a paid subscriber of Interconnected Premium! If you aren’t yet part of our premium edition, I hope you join us!
Five years after Alibaba did its secondary listing on the Hong Kong Stock Exchange (HKEX), the Chinese tech behemoth is finally about to get a primary listing, and with that, an easy path for Mainland retail investors to buy its shares via the Southbound Stock Connect program.
Last week, during the annual general meeting of Alibaba shareholders, the company rubber-stamped its decision to pursue a HKEX primary listing, after first starting (then pausing) the process two years ago. Sell-side analysts from big brokerage houses see this as a sure-fire catalyst to $BABA share price in the coming weeks; Morgan Stanley predicts up to $12 billion dollars of flow coming into the stock from the Mainland in the next six months.
If you are short-term trader and want to capitalize around this event, here are some key dates to keep in mind:
August 28: Alibaba primary listing on the HKEX officially begins
September 4: Southbound Stock Connect receives “go no-go” confirmation
September
69: Official announcement of Southbound Stock Connect accessSeptember
910: First day of trading with Southbound Stock Connect in effect
Since I am decidedly not a short-term trader, this event holds a different significance. Looking back, it is more than a bit ironic that the mom-and-pop retail investors of the Mainland would have never seen this day, if the US Congress (of all institutions) weren’t so hellbent on delisting Chinese companies from Wall Street five years ago. Looking forward, Alibaba finally gets the chance to build a retail fanbase from people who actually use its services. But its chance of becoming a high-flying “meme stock”, buoyed by an investor base who would always love it, irrationally and unconditionally (like Tesla or Palantir), may have already passed.