At the beginning of March, the Shanghai Stock Exchange and Shenzhen Stock Exchange each announced that NetEase Cloud Music, the music arm of NetEase, had been added into the list of stocks that can be traded through the Hong Kong Stock Connect platform, effective Monday.
On December 2, 2021, NetEase Cloud Music was listed on the main board of the Hong Kong Stock Exchange, and was included as a constituent of the Hang Seng Composite Industry Index in February this year. The index is one of the most influential stock price indexes in the Hong Kong stock market, covering the top 95% of the cumulative market capitalisation of the Hong Kong stock market.
In fact, NetEase Cloud Music has become a potential target of the Hong Kong Stock Connect since it was included as a constituent of the Hang Seng Composite Industry Index. According to Hong Kong Stock Connect regulations, the constituents of the Hang Seng Composite LargeCap Index, Hang Seng MidCap Index, and other constituents of the Hang Seng SmallCap Index with a market value of more than HK $5 billion, can be included in the list of tradable stocks of Hong Kong Stock Connect.
At the end of February, NetEase released its financial report for the fourth quarter and the whole year of 2021, showing that the net income of NetEase Cloud Music in 2021 was 7 billion yuan ($1.1 billion). The music arm’s gross profit margin reached 2% in Q4, remaining positive for three consecutive quarters. In terms of original music, by the end of 2021, the number of independent musicians found on the NetEase Cloud Music platform exceeded 400,000.