Market Analysis: If Alibaba is included in the Hong Kong Stock Connect, it is expected to release $3.2 billion QDII quota to quench overseas allocation demand

With Alibaba completing its primary listing in Hong Kong, it is expected to enter the Stock Connect as early as next month. This move will not only attract more southbound funds from mainland China to Alibaba's stock itself, but also provide an opportunity for qualified domestic institutional investors currently holding Alibaba shares to release their quotas for investing in more overseas assets. After Alibaba enters the Stock Connect, mainland investors can purchase Alibaba shares through the stock exchange mutual market access quotas. According to calculations, based on the size of existing QDII funds holding Alibaba shares, if these shares are held through the Stock Connect, up to approximately $3.2 billion in QDII quotas could be released. Analyst Rebecca Sin pointed out in a report that QDII funds investing in US stocks are expected to be the biggest beneficiaries under the quota release