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 yr’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 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 corporations, however with that dominance comes heavy publicity to its economic system.
The size of the rebound marks a pointy break from the final three years, when world 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 the town the pure outlet). Collectively, these forces clarify why Mainland Chinese language corporations have returned in such energy, and why the resurgence of Hong Kong’s trade seems to be totally different from previous cycles.
Determine 1. HKEX IPO Developments
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 Increase
After three years of market slowdown amid world financial tightening and geopolitical fractures, the capital market of Hong Kong has witnessed a outstanding revival. The hanging turnaround is pushed predominantly by privately owned Mainland Chinese language firms in search of offshore capital, which consists of 90% of the entire fundraising. HKEX stands out as the highest most popular itemizing venue for Mainland Chinese language corporations 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 grew to become engines of capital formation, enabling state-owned enterprises (SOEs), non-public corporations, and revolutionary startups to boost capital at scale, as Mainland China’s economic system bloomed from the Nineties by means of the 2010s.
Nevertheless, the political and financial nature of the Mainland China market, with capital controls and strict regulatory necessities, limits overseas entry. These components contributed to the attraction of HKEX as an offshore itemizing venue and some extent of entry for overseas buyers to achieve publicity to the Mainland China capital market.
Determine 2. Comparability between Better 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 Foreign money | CNY | CNY | CNY | HKD |
| Every day Value Restrict | ±10% | ±10% | ±30% on debut, ±10% thereafter | No restrict |
| Sector Focus | SOEs, blue chips | SMEs, startups | Early-stage SMEs | International Itemizing |
| Overseas Entry | Restricted | Restricted | Very Restricted | Full Entry |
| Regulator | CSRC | CSRC | CSRC | SFC (by way of HKEX) |
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 aside from 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 corporations.
Push Components from China
Mainland China’s post-COVID slowdown, marked by deflation and property market challenges, has left non-public corporations squeezed by worth wars and shrinking margins. With out state backing, many have little selection however to hunt overseas capital, a dynamic pushing listings to Hong Kong.
Mainland China is a policy-driven economic system. In 2024, the China Securities Regulatory Fee (CSRC) tightened IPO approvals, particularly for unprofitable or early-stage corporations. Consequently, 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 firms listed on HKEX raised in the identical interval.
Pull Components from Hong Kong
The elemental attraction of HKEX over its onshore counterparts lies in its totally open nature, with its foreign money, the Hong Kong greenback, as a freely convertible foreign money pegged to the US greenback. The free stream of capital and convertibility into onerous foreign money are important for any firm working on a world scale. That can also be true for early-stage buyers and founding members of the privately owned corporations 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 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 firms come to market in Hong Kong and the way buyers can entry them. The brand new Know-how Enterprises Channel[1] offers a confidential quick observe for specialist tech and biotech corporations, sectors closely backed in China. A+H listings[2] can now be authorized in simply 65 days, accelerating provide. On the similar time, HKEX lowered its public float requirement from 15% to 10% and reduce the retail allocation cap from 50% to 35%.
For buyers, these adjustments imply two issues: sooner deal stream, but in addition much less safety. Giant 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. Diminished float and tighter retail caps might enhance pricing effectivity within the brief run, however they heighten issues 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 growth presents each alternative and threat. On the upside, HKEX presents entry to Mainland China’s most dynamic non-public 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 adjustments in Chinese language coverage and geopolitical occasions. Persistent valuation reductions versus world friends elevate additional questions on long-term returns. The trade-off is evident: Hong Kong offers a gateway to Mainland China’s development tales, however just for buyers keen to simply 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 world exchanges, and what which means for long-term capital allocation; Half III shall be an advocacy-focused joint piece with CFA Society Hong Kong, analyzing the latest reforms, IPO worth discovery, and open market necessities.
References
Hong Kong’s IPO Increase Roars Again: Contained in the $14 Billion First-Half Surge and What’s Driving It
Hong Kong’s ECM Panorama in 1 2025
HKEX Posts File 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 file highs in 2025, pushed by vitality, mining and tech sectors – Griffith Information
PwC Hong Kong: PwC: 2025 poised to be probably the most lively 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 assist 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 Software Course of
