In the past few months, several major global asset managers have transferred Alibaba Group Holding Ltd's American depositary shares (ADR) to Hong Kong stocks as a result of MSCI and FTSE index adjustments, leading to a sharp increase in Alibaba Group Holding Ltd's stake in Hong Kong shares in the second quarter.

Recently, some media reported that after reviewing the 13F documents in the second quarter, it was found that Blackrock (BlackRock) sold 88 per cent of Alibaba Group Holding Ltd's ADR positions in the second quarter, involving 74.02 million shares, accounting for 0.06 per cent of his portfolio from 0.56 per cent. Some Hong Kong media checked the record of shares held by the Hong Kong Stock Exchange's Central Clearing system (CCASS) and found that Blackrock did not reduce his holdings, but transferred his holdings from US stocks to Hong Kong stocks. A spokesman for Blackrock also told Ignites Asia this week that Blackrock transferred Alibaba Group Holding Ltd American depositary shares to Hong Kong stocks in June 2021 based on changes in the Mingsheng index (MSCI).

In fact, the record of holdings in the HKEx's Central Clearing system shows that more institutions have also transferred Alibaba Group Holding Ltd's ADR to Hong Kong stocks. For example, State Street transferred 28.312 million shares of ADR, while u. S.holdings fell from 0.43% to 0.05%; T. Rowe Price changed its position of about 16.47 million ADR shares, reducing u.s. stock holdings from 1.16% to 0.73%; and UBS (UBS) transferred 11.945 million ADR shares, while u.s. shares fell from 1.33% to 0.42%. In the second quarter of this year, the asset management giant Invesco also transferred 45 million shares of Alibaba Group Holding Ltd ADR to Hong Kong stocks, and it has transferred 23 million shares in the first quarter.

Originally, in May this year, index compiling company MSCI released its semi-annual report, showing that because Alibaba Group Holding Ltd has met the conversion conditions, its MSCI China and other MSCI GIMI composite index will change from tracking Ali's US stock ADR listed on the New York Stock Exchange to tracking 9988 listed on the Hong Kong Stock Exchange, which will take effect on May 28. The FTSE index announced the adjustment as early as February and took effect on March 22nd.

Based on this, all passive funds will make corresponding adjustments and transfer their positions of Alibaba Group Holding Ltd ADR to Hong Kong stocks. After that, there will be other index foundations with similar operations, the source said.

By the end of June, Vanguard, the world's second-largest asset manager, had transferred all its holdings of Alibaba Group Holding Ltd ADR to Hong Kong stocks. Previous records show that Vanguard held 62.65 million shares of ADR at the end of 2020. By the end of March this year, it had transferred 93.58 per cent of its positions in US stocks to Hong Kong stocks.

According to Hong Kong media reports, the record of shares held by the HKEx's Central Clearing system shows that as of the March 31 quarter, Alibaba Group Holding Ltd held 8.28 billion shares (common shares, the same below) in CCASS, accounting for 38.17% of the issued shares. As of the end of June, CCASS held 10.118 billion shares, accounting for 46.64 per cent of the outstanding shares. This means that Alibaba Group Holding Ltd's shareholding in CCASS increased by about 1.838 billion shares, or 8.47%, in the second quarter, reflecting the continued relocation of large companies to Hong Kong stocks. Based on the closing price of HK $220 on June 30, the market value of the shares is about HK $404.3 billion.

Meanwhile, Citibank, Alibaba Group Holding Ltd's American stock depositary bank, holds 3.693 billion shares in CCASS, accounting for 17.02 per cent of the issued shares. HSBC, the second-largest shareholding intermediary, increased its stake from 1.854 billion shares at the end of March to 3.145 billion shares at the end of June, increasing its share from 8.55 per cent to 14.5 per cent, reflecting the transfer of a large number of institutions to Hong Kong stocks.