According to estimates by Bloomberg Intelligence Alibaba Group Holding Limited BABA The extension of Stock Connect until September 9 will free up up to $3.2 billion in cash in global markets by allowing domestic institutional investors to trade stocks instead of their foreign exchange quota.
Stock Connect is a mutual market access program that allows investors in mainland China and Hong Kong to trade stocks listed on other markets through domestic exchanges and clearing houses.
Asset managers can use the released quota to trade other stocks, Bloomberg reports.
Analysts believe Japanese and American stocks could potentially benefit from this development.
Bloomberg Intelligence expects the quota to be fully available in three years.
Last week, Alibaba announced plans to allow mainland investors to begin trading in Hong Kong.
Alibaba Group Holding shares have lost 12 percent over the past 12 months as the company struggled to generate value in a weakening domestic economy hampered by price wars in e-commerce.
However, despite the US sanctions, the company remains focused on realising its ambitions in artificial intelligence, which could lead to an increase in shareholder value.
Two weeks ago, Alibaba reported a 4% year-over-year increase in first-quarter revenue to $33.47 billion, below analysts’ consensus estimate of $34.81 billion. Adjusted earnings per ADS of $2.26 beat analysts’ consensus estimate of $2.13. Net income fell 29% year-over-year to $3.34 billion. Adjusted net income fell 9% year-over-year to $5.6 billion.
Investors can participate in the Chinese e-commerce giant through Avantis Emerging Markets Stock ETF AVEM And Global X Artificial Intelligence and Technology ETF AIQ.
Price promotion: At last check on Wednesday, BABA shares were trading 0.38% lower at $81.14 in premarket trading.
Photo courtesy of Alibaba
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