Hong Kong market’s IPO reforms, efficient this month, reshape how offers are priced and who will get entry. For buyers, this marks a pivotal shift in market integrity and allocation equity. The impression is already seen. On this 12 months’s first half, firms itemizing on Hong Kong Exchanges and Clearing Restricted (HKEX) raised $14 billion (HK$109 billion). Mainland China battery producer and know-how firm CATL’s $4.6 billion providing, the most important IPO worldwide thus far this 12 months, underscores investor urge for food for Mainland Chinese language listings.
For buyers, the surge alerts each alternative and danger: Hong Kong has reasserted itself because the offshore gateway for Mainland Chinese language companies, however with that dominance comes heavy publicity to its financial system.
The size of the rebound marks a pointy break from the final three years, when world tightening, weak sentiment, and geopolitical shocks saved Hong Kong’s fairness market subdued. What modified in 2025 was a convergence of push elements inside Mainland China (deflation, tighter onshore guidelines, and slowing progress) with pull elements in Hong Kong (reforms and capital flexibility making the town the pure outlet). Collectively, these forces clarify why Mainland Chinese language companies have returned in such energy, and why the resurgence of Hong Kong’s trade appears to be like completely different from previous cycles.
Determine 1. HKEX IPO Traits
Supply: HKEX, SEC. Word: Minor variations in decimal values between charts resulted from FX conversion rounding.
A Market Reawakens: The Drivers Behind HKEX’s 2025 IPO Growth
After three years of market slowdown amid world financial tightening and geopolitical fractures, the capital market of Hong Kong has witnessed a exceptional revival. The placing turnaround is pushed predominantly by privately owned Mainland Chinese language firms in search of offshore capital, which consists of 90% of the full fundraising. HKEX stands out as the highest most popular itemizing venue for Mainland Chinese language companies in comparison with its onshore counterparts.
Since Mainland China’s financial reform within the late twentieth century, three onshore inventory exchanges had been established: first Shanghai, adopted by Shenzhen, after which Beijing. Collectively, these exchanges grew to become engines of capital formation, enabling state-owned enterprises (SOEs), personal companies, and revolutionary startups to boost capital at scale, as Mainland China’s financial system bloomed from the Nineteen Nineties by way of the 2010s.
Nevertheless, the political and financial nature of the Mainland China market, with capital controls and strict regulatory necessities, limits international entry. These elements contributed to the attraction of HKEX as an offshore itemizing venue and a degree of entry for international buyers to achieve publicity to the Mainland China capital market.
Determine 2. Comparability between Better China Exchanges
Supply: ExpatInvestChina.
Hong Kong SAR, established underneath British rule and preserved after the 1997 handover underneath “One Nation, Two Techniques,” retains options that set it other than mainland venues. This consists of widespread legislation construction, world entry, and free capital flows. These options proceed to make HKEX the pure offshore gateway for Mainland Chinese language companies.
Push Components from China
Mainland China’s post-COVID slowdown, marked by deflation and property market challenges, has left personal companies squeezed by worth wars and shrinking margins. With out state backing, many have little selection however to hunt international capital, a dynamic pushing listings to Hong Kong.
Mainland China is a policy-driven financial system. In 2024, the China Securities Regulatory Fee (CSRC) tightened IPO approvals, particularly for unprofitable or early-stage companies. Consequently, onshore fundraising collapsed to $9.3 billion throughout 101 IPOs, down 83% 12 months over 12 months. Within the first half of 2025, mainland exchanges raised solely $4.7 billion, lower than one-third of what firms listed on HKEX raised in the identical interval.
Pull Components from Hong Kong
The basic attraction of HKEX over its onshore counterparts lies in its totally open nature, with its forex, the Hong Kong greenback, as a freely convertible forex pegged to the US greenback. The free move of capital and convertibility into arduous forex are important for any firm working on a worldwide scale. That can also be true for early-stage buyers and founding members of the privately owned companies contemplating exit methods.
Hong Kong is considered a particular administrative area by Mainland China, and the A+H itemizing mannequin is very inspired. That’s, twin listings the place a mainland Chinese language firm has its shares traded on each a inventory trade in mainland China (A-shares) and Hong Kong’s trade (H-shares). On this 12 months’s first half, 21 out of 44 IPOs are A+H listings, a rise of 110% YoY.
HKEX Structural Reforms
Latest reforms have reshaped how firms come to market in Hong Kong and the way buyers can entry them. The brand new Know-how Enterprises Channel[1] gives a confidential quick monitor for specialist tech and biotech companies, sectors closely backed in China. A+H listings[2] can now be accepted in simply 65 days, accelerating provide. On the identical time, HKEX lowered its public float requirement from 15% to 10% and reduce the retail allocation cap from 50% to 35%.
For buyers, these modifications imply two issues: sooner deal move, but in addition much less safety. Massive Mainland Chinese language issuers can now carry sizable choices to market extra rapidly whereas retaining extra management, which advantages institutional allocations on the expense of retail entry. Decreased float and tighter retail caps could enhance pricing effectivity within the brief run, however they heighten considerations about liquidity and governance in the long term. In brief, entry has improved for giant buyers, whereas dangers for smaller buyers have elevated.
What it Means for Traders
For buyers, Hong Kong’s IPO increase presents each alternative and danger. On the upside, HKEX gives entry to Mainland China’s most dynamic personal firms. On the draw back, the market is very concentrated: roughly 80% of HKEX’s capitalization is tied to Mainland Chinese language issuers, leaving buyers uncovered to modifications in Chinese language coverage and geopolitical occasions. Persistent valuation reductions versus world friends increase additional questions on long-term returns. The trade-off is evident: Hong Kong gives a gateway to Mainland China’s progress tales, however just for buyers keen to just accept focus and volatility as the value of entry.
That is the primary in a three-part collection. Half II will discover how Hong Kong’s positioning stacks up towards world exchanges, and what which means for long-term capital allocation; Half III might be an advocacy-focused joint piece with CFA Society Hong Kong, analyzing the current reforms, IPO worth discovery, and open market necessities.
ReferencesHong Kong’s IPO Growth Roars Again: Contained in the $14 Billion First-Half Surge and What’s Driving ItHong Kong’s ECM Panorama in 1 2025
HKEX Posts Document Q1 Revenue Amid Surge in IPOs and Buying and selling Quantity – Beijing Occasions
Chinese language Mainland and HK IPO Markets 2025 mid-year – KPMG China
What China’s itemizing frenzy in Hong Kong means for buyers | The Straits Occasions
China’s Belt and Highway funding hits report highs in 2025, pushed by vitality, mining and tech sectors – Griffith Information
PwC Hong Kong: PwC: 2025 poised to be probably the most energetic IPO marketplace for Hong Kong in 4 years; fundraising anticipated to rank no.1 globally
Mainland China IPOs Drop in 2025 Amidst Regulatory Crackdown – Information and Statistics – IndexBox
China Inventory Exchanges In contrast
[1] Know-how Enterprises Channel (TECH): Launched in Could 2025 collectively by HKEX and SFC, Know-how Enterprises Channel (TECH), designed to help Specialist Know-how Firms and Biotech Firms to streamline the IPO processes.
[2] Accelerated Timeframe for Eligible A-share Listed Firms: Introduced on Oct 18, 2024 collectively by HKEX and SFC, Joint Assertion on Enhanced Timeframe for New Itemizing Utility Course of
