Hong Kong’s IPO market is on fire — here’s what’s fueling the surge

Hong Kong’s Initial Public Offering (IPO) market has witnessed an extraordinary resurgence in the first half of this year, with new listing volumes soaring to a remarkable $14 billion, an approximate eightfold increase compared to the same period in 2024. This dramatic turnaround marks a significant revival for the city’s equity capital markets, which had experienced years of subdued activity following post-pandemic risk-off sentiment and stuttering economic growth. The frenzy of new listings, totaling 43 with proceeds topping $13.6 billion in the first half alone, has positioned Hong Kong to potentially reclaim its mantle as the world’s largest listing destination, surpassing even the formidable Nasdaq and New York Stock Exchange.

A primary catalyst fueling this renewed dynamism is a robust shift in Beijing’s regulatory stance, providing crucial policy tailwinds for Chinese companies. Chinese President Xi Jinping’s February directives, signaling a concerted effort to support the private sector, have been instrumental. This shift, coupled with long-awaited approvals for mainland firms to list offshore, unleashed a wave of pent-up demand, particularly for high-quality, consumer-facing companies less exposed to geopolitical headwinds. The Chinese securities regulator’s measures to fast-track approvals and Hong Kong’s own “Technology Enterprises Channel” have provided a much-needed “shot in the arm,” encouraging leading corporate citizens, especially in burgeoning technology and biotech sectors, to seek listings in the financial markets of Hong Kong.

Compounding the regulatory impetus is the ample market liquidity stemming from a significant buying spree by mainland investors. Driven by an artificial intelligence frenzy sparked by breakthroughs from entities like DeepSeek, mainland capital has increasingly flowed into Hong Kong shares. Southbound net inflows, tracked through the cross-border Stock Connect scheme, surged to record highs in the April-June quarter, a stark contrast to the muted performance of China’s benchmark CSI 300 index. This shift has seen onshore investors redirect substantial funds to Hong Kong-listed equities, with southbound inflows now accounting for nearly half of Hong Kong’s daily stock turnover, profoundly bolstering the city’s investment trends and supporting new Hong Kong IPO activity.

A pivotal factor driving the volume of new listings is the escalating trend of A-then-H dual listings, where companies already traded on mainland exchanges seek a secondary listing in Hong Kong. This strategy, exemplified by battery maker Contemporary Amperex Technology’s $5 billion secondary offering, the world’s largest such offering this year, allows Chinese companies to fund their globalization strategies, leveraging the more fungible Hong Kong dollar in international markets. Furthermore, Hong Kong’s Stock Exchange offers greater inclusivity for emerging sectors like AI, renewable energy, and biotech, aligning seamlessly with the evolving fundraising needs of mainland firms. This diversification of fundraising avenues is critical for the Chinese Economy’s leading enterprises.

Underpinning these strategic moves are persistent delisting fears in U.S. markets, particularly amid heightened U.S.-China tensions. For many Chinese firms, Hong Kong has emerged as a preferred IPO destination, serving as a pragmatic alternative or a critical “extra insurance” against the unlikely event of a delisting from U.S. exchanges. This proactive approach by companies to establish a “plan B” underscores the strategic importance of Hong Kong as a reliable and accessible capital market, ensuring business continuity and access to global capital despite geopolitical uncertainties. The robust activity signals strong confidence in Hong Kong’s enduring role in global financial markets.

The confluence of Beijing’s policy support, robust mainland liquidity, strategic dual listings, and geopolitical considerations has not only revitalized Hong Kong’s IPO landscape but also improved overall market valuations. The Hang Seng index has seen a stellar 21% gain this year, making it one of the best-performing major markets globally. With PwC projecting up to 100 IPOs and total fundraising exceeding $25.5 billion this year, the city is firmly on track to consolidate its position as a leading global financial hub, providing a crucial fundraising platform for Chinese enterprises navigating a complex global economic environment.