As per Bloomberg Intelligence estimates, Alibaba Group Holding Limited’s (NYSE:BABA) addition to Stock Connect by September 9 can unlock up to $3.2 billion in cash across global markets by enabling domestic institutional investors to transact shares instead of their foreign exchange quota.
Stock Connect refers to a Mutual Market Access program that enables investors in mainland China and Hong Kong to transact shares listed on other markets through domestic stock exchanges and clearing houses.
Asset managers can tap the released quota to transact other shares, Bloomberg reports.
Analysts tout Japan and U.S. equities as potential beneficiaries of the move.
Bloomberg Intelligence expects the quota to be fully available in another three years.
Last week, Alibaba shared plans to enable mainland investors to start trading in Hong Kong.
Alibaba Group Holding stock lost 12% in the last 12 months as it struggled to generate value in a lackluster domestic economy stifled by domestic e-commerce rivalry via price war.
However, the company remains focused on accomplishing its artificial intelligence ambitions despite the U.S. sanctions, which have the potential to unlock shareholder value.
Two weeks ago, Alibaba reported fiscal first-quarter revenue growth of 4% year-on-year to $33.47 billion, missing the analyst consensus estimate of $34.81 billion. Adjusted earnings per ADS of $2.26 beat the analyst consensus estimate of $2.13. Net income plunged 29% Y/Y to $3.34 billion. Adjusted net income declined 9% Y/Y to $5.6 billion.
Investors can gain exposure to the Chinese e-commerce juggernaut through Avantis Emerging Markets Equity ETF (NYSE:AVEM) and Global X Artificial Intelligence & Technology ETF (NASDAQ:AIQ).
Price Action: BABA stock traded lower by 0.38% at $81.14 premarket at the last check Wednesday.
Photo courtesy Alibaba
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