IPO Momentum in Hong Kong Market Expected to Continue as Chinese Assets Become “Must-Invest”
Since last September, the Hong Kong stock market has staged a pronounced recovery, reclaiming the global lead in first-half IPO volumes and witnessing a doubling of daily trading turnover, signaling a robust upturn in market vitality.
Bonnie Chan, Chief Executive Officer of Hong Kong Exchanges and Clearing Limited, recently observed that this IPO enthusiasm shows no signs of abating. Faced with a complex international environment, an increasing flow of foreign capital is channeled through Hong Kong to access Chinese assets, which have shifted in investors’ minds from “off-limits” to essential portfolio components.
While policy measures sparked the initial rally, Chan notes that the surge since January is firmly rooted in corporate fundamentals. During her visits to U.S. and European investment banks, she found audiences eager for insights into mainland enterprises, reflecting a sharp uptick in foreign interest.
The first half of the year delivered extraordinary IPO activity, with many offerings oversubscribed by thousands of times. High-profile listings—including CATL and Mixue Group—and a series of 18A issuances achieving remarkable debut gains underscored the market’s strength.
With more than 200 companies in the IPO pipeline—half of them technology firms alongside 18A, 18C, and established new-economy entrants—Chan is confident that deal supply will remain ample. Her principal concern instead lies with sustaining investor demand.
Encouragingly, major IPOs this year have seen foreign participation rates of 70–80 percent, drawing capital from Europe, the Middle East, and Southeast Asia, with significant long-term fund involvement. Amid global uncertainties, many large funds are reallocating away from U.S. assets, seeking markets of sufficient scale to absorb substantial flows—needs that Hong Kong meets.
Since the DeepSeek listing earlier this year, global investors have reappraised mainland stocks, abandoning the old view that China was “uninvestable” and embracing them as indispensable. Chan recounts a long-term fund manager telling her that Hong Kong has delivered abundant opportunities, with policy stability, market depth, and rapid technology growth proving difficult to match elsewhere.
By the end of August, IPO fundraising in Hong Kong reached HKD 137.5 billion—nearly six times last year’s level and far outstripping global norms—with A+H share issuances alone accounting for 70 percent of the total. This success has accompanied a shift from the traditional H-share-then-A-share path to an A-share-then-H-share approach, driven by companies seeking overseas capital for international expansion.
HKEX collaborates closely with the Shanghai, Shenzhen, and Beijing exchanges to serve the real economy in a complementary fashion. Analysis shows that A-share liquidity for A-first-then-H-first companies rose by an average of 15 percent post-listing, illustrating a virtuous interaction between the two markets.
Hong Kong’s appeal extends beyond mainland issuers to include Southeast Asian companies and even a Kazakh tungsten miner that listed concurrently in Astana and Hong Kong. Leading Asia in turnover and fundraisings, HKEX’s deep liquidity has inspired smaller exchanges to create derivatives based on Hong Kong stocks, boosting both local and Hong Kong market activity.
The market’s open architecture welcomes companies of all sizes and investors with varied risk appetites, from blue-chip stalwarts to potential growth stories. Chan cites Tencent’s modest debut as an example of a small issuer that has since evolved into a global leader.
HKEX will continue to refine its regulatory framework to ensure that listing processes adapt to evolving market needs, better serving both issuers and investors. Yet gaps remain: while Hong Kong excels in equities and derivatives, its bond and commodity platforms, despite HKEX’s ownership of the London Metal Exchange, have room for growth.
To meet the growing demand for diversified allocations, HKEX plans to devote additional resources this year to enhance its fixed-income and commodity offerings, aiming to parallel the breadth of products available in other major markets.
On cross-border connectivity, the inclusion of REITs in the Stock Connect program is nearing completion. This initiative, part of five cooperation measures introduced last May by the China Securities Regulatory Commission, will admit eligible mainland and Hong Kong REITs into the scheme, enriching the roster of tradable assets.
Looking ahead, Chan envisions extending seamless intermarket access to commodities and derivatives. By enabling investors to trade any asset class across borders, Hong Kong and mainland markets alike stand to benefit from deeper integration and mutual liquidity enhancement.
