Alibaba has finally entered the Hong Kong Stock Connect, and funds from the south have been continuously buying in today.
According to Morgan Stanley's calculations, if the southbound funds hold a stake of 8% to 17%, it corresponds to a future inflow of funds of approximately USD 17 billion to USD 37 billion within the next year. Currently, southbound funds hold approximately 10% and 12% of Tencent and Meituan, respectively.
Of course, the market's greater divergence on Alibaba lies in industry competition and the consumer environment, especially with the latest strategies of Pinduoduo.
However, Pinduoduo mainly allocates billions of resources to subsidize merchants, not consumers. The current consumption imbalance is due to insufficient demand, not insufficient supply. Therefore, high-quality merchants can earn more, but it does not necessarily mean they can drive more consumption in the current retail environment.
Therefore, Pinduoduo's focus is more on improving the ecological environment to achieve long-term sustainable growth, rather than continuing to grab market share in the short term.
For Alibaba, one of the current key points the market is focusing on is whether the gap between CMR and GMV can be narrowed. Over the past three years, Pinduoduo's monetization rate has increased from around 3.2% in 2020 to around 4.8% in 2023, while Alibaba has long maintained a level of 4%, with Tmall/Taobao at approximately 6%/2% respectively.
As Alibaba's low-cost channel, Taobao's monetization rate is significantly lower than Pinduoduo's. Even if Alibaba refocuses on the growth of low-cost channels and slightly increases the monetization rate, it remains the lowest-cost channel for merchants. Therefore, it is theoretically feasible for Alibaba to improve the matching of GMV and CMR, and whether the valuation can be increased also focuses on this.
Despite some uncertainties, Alibaba's undervaluation and continuous buybacks help to offset some shortcomings, making it somewhat attractive to southbound funds. With increased liquidity, it is all benefits and no harm to the stock price

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Alibaba is experiencing strong buying pressure from southbound funds in the Hong Kong Stock Connect, with an expected inflow of funds ranging from USD 17 billion to USD 37 billion in the next year. Market views on Alibaba are divided, mainly focusing on industry competition and consumer environment. Pinduoduo's strategy is to improve the ecological environment for long-term growth, while Alibaba needs to pay attention to the gap between CMR and GMV. Despite facing challenges, Alibaba's undervaluation and ongoing buybacks continue to attract southbound funds, with increased liquidity benefiting the stock price

- Alibaba has finally entered the Hong Kong stock connect, attracting continuous inflow of funds from the south today. If southbound funds hold 8% to 17% of shares, an estimated influx of $17 billion to $37 billion USD is expected in the next year. Market focus on Alibaba centers around industry competition, consumer environment, and Pinduoduo's latest strategies, aiming to improve the ecological environment for sustainable growth rather than short-term market share gains. Attention is on narrowing the gap between CMR and GMV for Alibaba to potentially boost valuation and appeal to southbound funds.

Hong Kong Stock Market Review: Alibaba Bought Out