LipinhoRico
Sep 25, 1:53 AM
$BABA Mainland China’s stock markets are closed today for the holiday, and the Stock Connect program is also not operating. This means Hong Kong is trading without the usual southbound investment flows from mainland Chinese investors.
That matters because southbound flows can represent an important source of liquidity and buying demand for large Hong Kong-listed Chinese companies such as Alibaba. With that flow temporarily absent, liquidity can be thinner and price movements can become more volatile, especially around the market open.
This can help explain why Alibaba opened with a downside gap even though there was no major new negative company-specific news overnight. In other words, the weaker opening may be driven more by market structure, reduced liquidity and profit-taking than by any deterioration in Alibaba’s fundamentals.
1 replies