NetEase stock price rises due to Hong Kong main listing plans and Southbound Trading potential

Investing.com - NetEase (HK:9999) stock rose on Tuesday after the company announced it is moving toward becoming a primary listed company in Hong Kong — a move that could ultimately give mainland Chinese investors the opportunity to invest in its shares.

NetEase’s stock surged up to 3.5% to HKD 184.30, making it one of the better-performing stocks in the Hang Seng Index, which fell 0.5% on the same day.

The Chinese video game maker stated in a filing on Monday that the Hong Kong Stock Exchange has notified the company that, by 2025, over 55% of its global trading volume will occur in Hong Kong, qualifying it for dual primary listing on the Hong Kong Stock Exchange.

Currently, NetEase’s Hong Kong shares are considered a secondary listing. The company has a 12-month grace period to comply with Hong Kong listing rules to migrate to a dual primary listing in Hong Kong.

A dual primary listing would make NetEase’s stock eligible for inclusion in the Stock Connect scheme, which allows mainland investors to invest in selected Hong Kong stocks.

Morgan Stanley, in a report, said it expects NetEase to meet the criteria before the dual primary listing deadline and to be included in the Southbound Trading Plan by early 2027.

The firm reaffirmed its “outperform” rating on NetEase, believing that potential inclusion in the Southbound Connect will serve as a significant positive catalyst for the company.

Inclusion in the Southbound Connect opens a new funding pool for NetEase — a trend that could bring more buying interest to its Hong Kong shares. Competitor Alibaba Group (HK:9988) also received a similar boost when it qualified for Southbound Trading at the end of 2024.

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