The voluntary conversion of e-commerce giant Alibaba Group Holding Ltd’s secondary listing to primary listing on the Hong Kong Stock Exchange took effect on Wednesday, which may inject some impetus to the city’s stock market.

The Hangzhou, Zhejiang province-based company said in an earlier statement that it will have dual primary listings on both the Hong Kong bourse and the New York Stock Exchange. The voluntary conversion to primary listing in Hong Kong does not involve any issue of new shares and fundraising.

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According to a recent Morgan Stanley report, Alibaba will probably be included in the Southbound Stock Connect, which allows qualified  mainland investors to trade its shares via stock connect programs between Hong Kong and the Chinese mainland bourses of Shanghai and Shenzhen.

This may attract an additional southbound capital inflow of approximately $12 billion for the tech company in the first six months, the report said.

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Alibaba has been listed on New York Stock Exchange since September 2014, marking what was at the time the largest IPO in history. It raised $13 billion from the Hong Kong bourse via a secondary listing in November 2019. In July 2022, Alibaba applied for a primary listing in Hong Kong.

A primary listing implies the issuer has met the strict regulatory and financial reporting criteria of the bourse concerned, which leads investors to perceive its stock as of high quality because the issuer is regarded as reputable. A secondary listing, which creates access to new capital markets, may have less stringent requirements and lower costs, and gives the issuer greater flexibility.

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Shares of Alibaba on the Hong Kong stock exchange dropped 0.94 percent to HK$79.20 ($10.15) as of 11:40 am on Wednesday.

Hong Kong’s benchmark Hang Seng Index dipped 163.01 points, or 0.9 percent, to 17712.18 as of the same time.

Contact the writer at thor_wu@chinadailyhk.com