Scenes from the Taobao Outdoor Life Festival held in Yangshuo, China (Getty Images)

China’s retail investors can finally trade Alibaba shares 10 years after it went public — thanks to a US law

9/12/24 3:26PM

Imagine if American retail investors couldn’t trade Amazon. For years, that’s what it was like for China’s legions of mom and pop investors when it comes to Alibaba, the country’s biggest online retailer.

But this week, Alibaba finally joined Mainland China’s Southbound Stock Connect program after it obtained a primary listing on the Hong Kong Stock Exchange (HKEX). The program allows mainland China investors to access eligible Hong Kong shares.

In some ways, the decision to file for a HKEX listing was fueled by a 2020 US law. Alibaba first went public on the New York Stock Exchange in 2014. Then in 2020, Congress passed the Holding Foreign Companies Accountable Act, which said that foreign companies publicly listed in the US will be banned if they couldn’t comply with Public Company Accounting Oversight Board audits.

It also targeted specifically at China and, among other things, asked Chinese companies to disclose their connections to the Chinese Communist Party. Five state-owned Chinese companies, including China’s leading energy and insurance company, voluntarily delisted themselves from the NYSE. Other companies, including Alibaba, Netease, Baidu and Bilibili, chose to file for a secondary listing in Hong Kong as a backup option for their investors if they were forced to delist from the NYSE.

In late 2022, the SEC said that it was able to audit Chinese companies listed in the US, so the risk of delisting was gone. But Alibaba still proceeded to pursue a primary listing in HKEX, which finally went through last month, five years after getting its secondary listing.

Shares were up 4.2% in Hong Kong on Sept. 10, the first day of trading with the Stock Connect in effect. Investors bought over $8.5 billion HKD of Alibaba’s stock that day via the program, with purchases from Shenzhen and Shanghai accounted for about half of the day’s turnover.

As a result of the Chinese government’s regulatory crackdown on leading big tech companies beginning in late 2020, Alibaba’s shares have fallen more than 70% from their October 2020 peak.

“The added access and additional liquidity from Mainland retail is actually quite significant,” said Kevin Xu, the founder of Interconnected Capital, a hedge fund that invests in A.I. ventures. “But that doesn’t change the fact that the economy is still very challenged.”

There may be “a bit of an unfortunate timing”, he added, as the first day that the Stock Exchange program became official coincided with the release of a Chinese CPI report that showed that deflationary forces continue to dominate.

Tasha Matsumoto

Stocks close lower, trimming steeper losses as oil retreats

Oil prices fell after Israeli Prime Minister Benjamin Netanyahu said his country is helping with US efforts to open the Strait of Hormuz.

Nate Becker7h

Stocks get a jolt as Netanyahu says Israel is helping US efforts to open Strait of Hormuz

Israeli Prime Minister Benjamin Netanyahu said in a press conference that his country is helping with US efforts to open the Strait of Hormuz, putting a jolt into stocks.

The S&P 500, which had been solidly negative for most of the day, turned slightly green after the remarks. The rebound lost a bit of steam shortly thereafter, but stocks still remained higher than they were before Netanyahu’s comments.

“Israel is helping, in its own way, in intel and other means, the American efforts to open the Strait of [Hormuz],” Netanyahu said, according to a video of the press conference.

Here are another few interesting headlines coming across from the presser, per Reuters:

*NETANYAHU: IRAN HAS NO CAPACITY TO ENRICH URANIUM OR MAKE BALLISTIC MISSILES AFTER 20 DAYS OF WAR

*NETANYAHU: CAN’T DO A REVOLUTION FROM THE AIR, THERE NEEDS TO BE A GROUND COMPONENT AS WELL

*NETANYAHU: ISRAEL ACTED ALONE AGAINST SOUTH PARS

*NETANYAHU: TRUMP ASKED US TO HOLD OFF ON FUTURE SUCH ATTACKS

And here’s how the market reacted instantly after his comments:

Stocks Slump as Energy Surge Fuels Inflation Fears: Markets Wrap

“Israel is helping, in its own way, in intel and other means, the American efforts to open the Strait of [Hormuz],” Netanyahu said, according to a video of the press conference.

Here are another few interesting headlines coming across from the presser, per Reuters:

*NETANYAHU: IRAN HAS NO CAPACITY TO ENRICH URANIUM OR MAKE BALLISTIC MISSILES AFTER 20 DAYS OF WAR

*NETANYAHU: CAN’T DO A REVOLUTION FROM THE AIR, THERE NEEDS TO BE A GROUND COMPONENT AS WELL

*NETANYAHU: ISRAEL ACTED ALONE AGAINST SOUTH PARS

*NETANYAHU: TRUMP ASKED US TO HOLD OFF ON FUTURE SUCH ATTACKS

And here’s how the market reacted instantly after his comments:

Matt Phillips9h

Gold tumbles as market sees Fed shifting toward inflation fighting

Gold and gold miners tumbled Thursday, as the rolling Iran war energy crisis revived worries about inflation and pushed the market to take additional rate cuts this year off the table.

Gold (SPDR Gold Shares ETF) futures dropped roughly 6% shortly after 12 p.m. ET, hammering share prices for miners Newmont and Freeport-McMoRan. Silver (iShares Silver Trust) futures were down nearly 9%.

The decline in precious metals came alongside another sharp rise in energy prices. US benchmark crude oil (United States Oil Fund LP) and natural gas prices both jumped more than 3% after major Iranian attacks on Qatari energy infrastructure. US retail gasoline prices tracked by the American Automobile Association hit $3.884, up 33% from the end of last month, when a joint US-Israeli attack on Iran ignited hostilities.

Normally, gold prices are seen as a hedge on inflation, which might suggest that they should rise alongside expectations for persistent price increases.

But the speed of the Iran war energy shock — which will add to inflationary pressures already visible in recent economic reports, such as this week’s Producer Price Index, and could become a political problem for the Trump administration — has nudged traders to change their their views on whether the Federal Reserve would be able to deliver the rate cuts widely expected just a few weeks ago.

Yields on shorter-maturity US Treasury notes shot higher Thursday, reflecting expectations for tighter monetary policy. And prices in the market for federal funds futures suggest traders no longer see the US central bank cutting interest rates this year at all. (Early this month, market pricing implied expectations for two more cuts this year.)

On Thursday, yields fell on longer-term US government securities, such as the US 30-year bond. That suggests the market thinks a Fed shift toward inflation fighting and away from rate cutting would likely result in some decline in growth and/or inflation, helping to explain the drop in precious metals prices, as there would be less of a need for inflation hedges in such a scenario.

Bond Traders No Longer Price In Any Chance of Fed Cut in 2026

Normally, gold prices are seen as a hedge on inflation, which might suggest that they should rise alongside expectations for persistent price increases.

J. Edward Moreno9h

Novo says FDA has approved high-dose Wegovy shot

The Food and Drug Administration approved Novo Nordisk’s high-dose Wegovy shot, the company announced on Thursday.

Wegovy HD, a once-weekly 7.2-milligram injection, helped patients lose 20.7% of their body weight after 72 weeks, putting it in line with Eli Lilly’s competitor drug, Zepbound. By comparison, Wegovy typically has a maximum dose of 2.4 milligrams, which resulted in 15% weight reduction over 68 weeks in trials.

Wegovy HD was the first drug to be approved through the FDA’s new priority voucher system. This comes as Novo, despite being early to the GLP-1 boom, has been outpaced in sales by Lilly. The company released a pill version of Wegovy in January, which has shown strong early uptake, though new competitor products are set to debut this year and next.

The stock is down about 1.6% for the day, but was down nearly 3% before the announcement.

Tasha Matsumoto

Crudely speaking

10h

What we talk about when we talk about crude oil

While both WTI and Brent are light and sweet crude, differences in geography and chemical composition influence the Brent-WTI spread.

ODESSA, TEXAS - APRIL 27: Pump jacks working on the Permian Basin near Odessa