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 influence is already seen. On this yr’s first half, corporations 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 biggest IPO worldwide up to now this yr, underscores investor urge for food for Mainland Chinese language listings.
For buyers, the surge indicators each alternative and threat: 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 dimensions of the rebound marks a pointy break from the final three years, when international tightening, weak sentiment, and geopolitical shocks stored Hong Kong’s fairness market subdued. What modified in 2025 was a convergence of push components inside Mainland China (deflation, tighter onshore guidelines, and slowing development) with pull components in Hong Kong (reforms and capital flexibility making town the pure outlet). Collectively, these forces clarify why Mainland Chinese language companies have returned in such power, and why the resurgence of Hong Kong’s change appears completely different from previous cycles.
Determine 1. HKEX IPO Developments
Supply: HKEX, SEC. Notice: 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 international financial tightening and geopolitical fractures, the capital market of Hong Kong has witnessed a outstanding revival. The placing turnaround is pushed predominantly by privately owned Mainland Chinese language corporations in search of offshore capital, which consists of 90% of the entire fundraising. HKEX stands out as the highest most well-liked itemizing venue for Mainland Chinese language companies in comparison with its onshore counterparts.
Since Mainland China’s financial reform within the late 20th century, three onshore inventory exchanges have been established: first Shanghai, adopted by Shenzhen, after which Beijing. Collectively, these exchanges turned engines of capital formation, enabling state-owned enterprises (SOEs), non-public companies, and modern startups to boost capital at scale, as Mainland China’s financial system bloomed from the Nineties via the 2010s.
Nevertheless, the political and financial nature of the Mainland China market, with capital controls and strict regulatory necessities, limits international entry. These components contributed to the attraction of HKEX as an offshore itemizing venue and some extent of entry for international buyers to realize publicity to the Mainland China capital market.
Determine 2. Comparability between Higher China Exchanges
| Shanghai (SSE) | Shenzhen (SZSE) | Beijing (BSE) | Hong Kong (HKEX) | |
| Established | 1990 | 1990 | 2021 | 1891 |
| Market Cap (USD) | $ 6.6 trillion | $ 4.38 trillion | $63.6 billion | $4.1 trillion |
| # of Listed Corporations | 2,263 | 2,853 | 239 | 2,609 |
| Buying and selling Forex | CNY | CNY | CNY | HKD |
| Every day Worth Restrict | ±10% | ±10% | ±30% on debut, ±10% thereafter | No restrict |
| Sector Focus | SOEs, blue chips | SMEs, startups | Early-stage SMEs | International Itemizing |
| International Entry | Restricted | Restricted | Very Restricted | Full Entry |
| Regulator | CSRC | CSRC | CSRC | SFC (through HKEX) |
Supply: ExpatInvestChina.
Hong Kong SAR, established below British rule and preserved after the 1997 handover below “One Nation, Two Techniques,” retains options that set it aside from mainland venues. This consists of widespread regulation construction, international 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 non-public companies squeezed by worth wars and shrinking margins. With out state backing, many have little alternative 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. In consequence, onshore fundraising collapsed to $9.3 billion throughout 101 IPOs, down 83% yr over yr. Within the first half of 2025, mainland exchanges raised solely $4.7 billion, lower than one-third of what corporations 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 absolutely 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 world scale. That can be true for early-stage buyers and founding members of the privately owned companies contemplating exit methods.
Hong Kong is thought to be a particular administrative area by Mainland China, and the A+H itemizing mannequin is extremely inspired. That’s, twin listings the place a mainland Chinese language firm has its shares traded on each a inventory change in mainland China (A-shares) and Hong Kong’s change (H-shares). On this yr’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 corporations come to market in Hong Kong and the way buyers can entry them. The brand new Expertise 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 accredited in simply 65 days, accelerating provide. On the similar time, HKEX lowered its public float requirement from 15% to 10% and minimize the retail allocation cap from 50% to 35%.
For buyers, these adjustments imply two issues: sooner deal move, but additionally much less safety. Massive Mainland Chinese language issuers can now carry sizable choices to market extra shortly whereas retaining extra management, which advantages institutional allocations on the expense of retail entry. Lowered float and tighter retail caps might enhance pricing effectivity within the quick run, however they heighten considerations about liquidity and governance in the long run. Briefly, 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 threat. On the upside, HKEX provides entry to Mainland China’s most dynamic non-public corporations. On the draw back, the market is extremely concentrated: roughly 80% of HKEX’s capitalization is tied to Mainland Chinese language issuers, leaving buyers uncovered to adjustments in Chinese language coverage and geopolitical occasions. Persistent valuation reductions versus international friends increase additional questions on long-term returns. The trade-off is obvious: Hong Kong gives a gateway to Mainland China’s development tales, however just for buyers prepared to just accept focus and volatility as the value of entry.
That is the primary in a three-part sequence. Half II will discover how Hong Kong’s positioning stacks up towards international exchanges, and what which means for long-term capital allocation; Half III can be an advocacy-focused joint piece with CFA Society Hong Kong, analyzing the current reforms, IPO worth discovery, and open market necessities.
References
Hong Kong’s IPO Growth Roars Again: Contained in the $14 Billion First-Half Surge and What’s Driving It
Hong Kong’s ECM Panorama in 1 2025
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 Instances
Mainland China IPOs Drop in 2025 Amidst Regulatory Crackdown – Information and Statistics – IndexBox
China Inventory Exchanges In contrast
[1] Expertise Enterprises Channel (TECH): Launched in Might 2025 collectively by HKEX and SFC, Expertise Enterprises Channel (TECH), designed to assist Specialist Expertise Corporations and Biotech Corporations to streamline the IPO processes.
[2] Accelerated Timeframe for Eligible A-share Listed Corporations: Introduced on Oct 18, 2024 collectively by HKEX and SFC, Joint Assertion on Enhanced Timeframe for New Itemizing Software Course of
