Alibaba’s listing upgrade the lift Hong Kong needs

Alibaba Group Holding will complete on Wednesday (August 28) its long-delayed conversion to a primary listing from secondary status on the Hong Kong Stock Exchange. The move could be as big a deal for the city as the e-commerce juggernaut itself.

Hong Kong Exchanges and Clearing Limited is coming off a barnburner of a quarter. The April-June period was its best on record as stock trading and initial public offerings restored the bourse’s global financial hub mojo. The globe’s fourth-largest stock market saw net profits surge 9% to HK$3.16 billion (US$405 million), or HK$2.49 per share.

The Alibaba move could provide an additional tailwind. Generally speaking, one company rarely, if ever, makes or breaks an exchange. But Alibaba’s scale and importance to the mainland’s tech-economy narrative could unlock billions in new investments sure to filter into the broader Hong Kong market.

Upgrading to primary listing in Hong Kong — concluding a two-year process — allows Alibaba to tap titanically large flows of mainland capital. Alibaba’s shares now qualify to join Stock Connect, a scheme that connects Hong Kong’s exchange to markets in Shanghai and Shenzhen.

That will make it easier than ever for mainland investors to buy Alibaba shares, paving the way for capital inflows of as much as US$20 billion into the company over the next six months, according to estimates. And perhaps providing a sentiment boost for the broader market.

“We think the addition of Alibaba to the Stock Connect would have a positive impact on the stock and can help stabilize sentiment given that it is a household name among mainland investors,” says Marvin Chen, an analyst with Bloomberg Intelligence. He expects mainland holdings of the stock to jump by