Within the first of a two-part collection about Hong Kong’s marketplace for preliminary public choices, Zhang Shidong and Ao Yulu report that extra Chinese language corporations opted to record in Hong Kong within the first eight months of 2025 than in New York.
Hong Kong has overtaken the US as the brand new itemizing venue for mainland Chinese language corporations, marking a serious milestone for the world’s fourth-largest capital market after a decade of betting on its progress in its a lot bigger and stronger hinterland.
As many as 46 China-domiciled corporations raised a mixed HK$118.2 billion (US$16.5 billion) by way of preliminary public choices (IPOs) on the Hong Kong inventory change to date this yr, in contrast with 16 listings by Chinese language corporations within the US over the identical interval, which raked in a mere US$740.9 million, based on knowledge compiled by Bloomberg.
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There’s a good cause for flocking to Hong Kong. New shares have jumped by 19.4 per cent on common of their buying and selling debuts within the metropolis this yr, with some notably scorching shares just like the metabolic medication producer Innogen Pharmaceutical Group leaping virtually fourfold final week.
By comparability, new listings within the US have risen by a median of three.6 per cent over the identical interval, based on calculations by the Put up. After the standard pleasure of the primary days of buying and selling, these shares have since returned a median of 5.5 per cent.
Guangzhou Innogen Pharmaceutical Group’s founder and chairman Wang Qinghua (left) and chief monetary officer Jiang Fan throughout the firm’s buying and selling debut on the Hong Kong inventory change on August 15, 2025. Photograph: InvestHK alt=Guangzhou Innogen Pharmaceutical Group’s founder and chairman Wang Qinghua (left) and chief monetary officer Jiang Fan throughout the firm’s buying and selling debut on the Hong Kong inventory change on August 15, 2025. Photograph: InvestHK>
“Hong Kong’s capital market has been extra lively this yr and reveals indicators of continued restoration”, mentioned Kenny Ng, a strategist at China Everbright Securities Worldwide. “The rising rivalry between China and the US has added uncertainty to capital markets, which is why extra corporations are selecting to record in Hong Kong. There may be nonetheless the lingering threat of delisting for Chinese language shares within the US, [so] mainland corporations are likely to choose the Hong Kong market within the face of such unclear regulatory prospects.”
The diverging traits underscore the persistent simmering tensions between China and the US, with the strife widening past commerce to different areas together with expertise, army and finance. The Trump administration’s heightened regulatory scrutiny has spoiled the IPO urge for food of many Chinese language corporations, amongst them among the world’s largest gives like Up to date Amperex Know-how (CATL) and Shein.
Robin Zeng Yuqun (fifth from proper), the founder and chairman of CATL, struck the ceremonial gong to mark the beginning of buying and selling on the HKEX Join Corridor in Central on Might 20, 2025. Photograph: Solar Yeung alt=Robin Zeng Yuqun (fifth from proper), the founder and chairman of CATL, struck the ceremonial gong to mark the beginning of buying and selling on the HKEX Join Corridor in Central on Might 20, 2025. Photograph: Solar Yeung>
Many US buyers, from institutional funds to retail buyers, are additionally steering away from Chinese language shares listed in New York attributable to strain from conservative lawmakers who harangue towards offering funds for China. An govt order signed by US President Donald Trump throughout his first time period to “deal with the risk from securities investments that finance Communist Chinese language army corporations” was absorbed by his successor right into a broader order that included surveillance corporations. These orders stay in impact.
The spat over auditing oversight a number of years in the past, which nearly triggered a wholesale delisting of about 300 Chinese language corporations valued at US$1 trillion, additionally gave many IPO candidates trigger for pause.
How issues have modified in 10 quick years. Earlier than Trump’s first time period beginning in 2016, New York was the citadel of fundraising, the popular itemizing vacation spot for each Chinese language firm that would.
Hangzhou-based Alibaba Group Holding, the proprietor of this newspaper, raised US$25 billion on the New York Inventory Trade in 2014, making it the second-largest worldwide IPO in monetary historical past after Saudi Aramco’s US$29.4 billion sale in 2019.
International IPO rankings as of August 2025 alt=International IPO rankings as of August 2025>
After Trump took workplace, US-China relations deteriorated with a slew of tariffs towards Chinese language exports, a lot of that are nonetheless in place.
Because the commerce warfare spilled over into the Biden administration, relations slumped to the worst degree in many years. Amid the stress, a spat broke out over the auditing oversight of US-listed Chinese language corporations, prompting Gary Gensler, then chairman of the US Securities and Trade Fee, to threaten in 2022 to expel all of the Chinese language corporations from New York.
The disaster was averted in late 2022 after the US and China agreed to make use of Hong Kong because the “impartial floor” for the US Public Firm Accounting Oversight Board to look at the audit working papers of those US-listed Chinese language corporations.
Nonetheless, the injury to confidence was already performed. Whereas the spat was occurring, the Hong Kong Exchanges and Clearing (HKEX) was tweaking its itemizing guidelines, laying the groundwork to lure US-listed Chinese language corporations to boost further funds in Hong Kong.
In November 2019, Alibaba raised US$12.9 billion in a secondary itemizing in Hong Kong, within the metropolis’s largest IPO up to now. That blazed the trail for a slew of Chinese language tech corporations to name Hong Kong their new company dwelling: NetEase raised US$2.7 billion in June 2020, Baidu raised US$3.05 billion in March 2021, whereas Weibo raised US$193 million in December 2021.
“US listings face loads of hurdles similar to restrictions on investments or financing,” mentioned Dai Ming, a fund supervisor at Huichen Asset Administration in Shanghai. “Chinese language corporations could need to record at reductions, as an alternative of premiums. [That is why] they’re extra prepared to promote shares in Hong Kong. Each the first and the secondary market are doing very properly and valuations can include premiums.”
A retailer of the Chinese language tea chain Chagee at a purchasing centre in Beijing on July 31, 2025. Chagee’s American Depository Receipts have been listed within the US in April. Photograph: Reuters alt=A retailer of the Chinese language tea chain Chagee at a purchasing centre in Beijing on July 31, 2025. Chagee’s American Depository Receipts have been listed within the US in April. Photograph: Reuters>
Improved investor sentiment and the Hong Kong change’s transfer to quick observe approvals of inventory gross sales by well-established mainland corporations have fuelled a increase in Chinese language IPOs. Below a brand new framework, mainland-listed corporations with a minimal market capitalization of HK$10 billion are eligible for a quicker IPO software course of, which might slash the overview interval to 30 days, based on the HKEX and Hong Kong’s securities regulator.
CATL, the Chinese language maker of lithium batteries for electrical automobiles, has led IPO gross sales with a US$5.26 billion flotation this yr in Hong Kong. The lithium-battery producer and different mega offers from Chinese language corporations similar to Jiangsu Hengrui Prescribed drugs and Foshan Haitian Flavouring and Meals catapulted Hong Kong to the world’s busiest IPO market within the first half. IPOs surged 695 per cent from a yr in the past to US$14.1 billion within the first half, based on a report launched by HKEX in late July.
There are extra to come back, mentioned HKEX’s CEO Bonnie Chan Yiting. There have been between 150 and 200 corporations “within the pipeline”, together with many US$1-billion-plus jumbo offers, she mentioned in Might. This week, the change operator reported its greatest quarter but, as its interim web revenue soared 39 per cent to HK$8.52 billion.
A lion dance to mark the graduation of buying and selling after the Lunar New 12 months vacation on the Hong Kong inventory change on February 3, 2025. Photograph: Edmond So alt=A lion dance to mark the graduation of buying and selling after the Lunar New 12 months vacation on the Hong Kong inventory change on February 3, 2025. Photograph: Edmond So>
Three “formidable” clusters of corporations are tapping Hong Kong’s IPO market, Chan mentioned. The primary was a gaggle of Chinese language A-share corporations which are listed in Beijing, Shanghai or Shenzhen looking for to boost further funds offshore, within the so-called A-H listings.
The second group was the US-listed Chinese language corporations that wanted an inventory sanctuary nearer to dwelling and Asia’s buying and selling hours to minimise geopolitical dangers. The HKEX up to date its itemizing guidelines in 2017 to permit these corporations to hunt secondary choices in Hong Kong.
The third group was specialist expertise corporations, typically start-ups engaged in synthetic intelligence, biomedicine and pharmaceutical producers, robotics and a variety of “revolutionary” industries lined by Chapter 18C of the HKEX’s itemizing guidelines from March 2023.
On this regard, the HKEX has loads of room for upgrades and progress. Hong Kong has catapulted to change into the world’s second-largest IPO vacation spot after New York for biotech corporations for the reason that introduction of Chapter 18A for the pharmaceutical business in 2018. Chapter 18B for particular goal acquisition corporations, or so-called clean cheque acquirers, was rolled out in January 2022. The chapters can develop with extra alphabets as new industries and funding wants come up, Chan mentioned throughout an interview in June.
Nonetheless, Hong Kong’s market, at present the world’s fourth largest at US$7 trillion, “lacks enough liquidity” and the capability to accommodate a lot of IPOs, notably massive corporations from the mainland, mentioned Shen Meng, a director on the Beijing-based funding agency Chanson. “Regulators are deliberately slowing the [approvals of the] itemizing course of [of companies coming to] Hong Kong.”
“Beijing needs to assist Hong Kong’s function as a world monetary centre, but it surely can’t enable an extreme variety of mainland corporations to hurry [into] the town’s fundraising pool as too many listings could be dangerous with the town’s restricted liquidity”, Shen mentioned.
Shanghai and Shenzhen inventory indices in Shanghai on April 16, 2025. Photograph: Reuters alt=Shanghai and Shenzhen inventory indices in Shanghai on April 16, 2025. Photograph: Reuters>
Investor familiarity, market construction, and a collection of reforms – together with a revamp of the pricing and public providing guidelines earlier this month – have helped revive the IPO pipeline of the HKEX, based on analysts. The involvement of cornerstone buyers, broader retail participation, and distinctive market mechanisms have pushed up demand as properly.
Nonetheless, there are structural variations between the Hong Kong and US markets, mentioned Louis Wong, director at Phillip Capital Administration in Hong Kong. Native IPOs typically obtain huge oversubscription from public buyers, which boosts demand within the secondary market, he mentioned.
Everbright’s Ng echoed the view, saying the latest modifications to decrease the allocation ratio have contributed to the robust aftermarket efficiency.
“It means retail buyers are likely to obtain fewer shares, prompting them to chase the inventory after it begins buying and selling,” Ng mentioned.
Mixue Group’s mascot Snow King struck the ceremonial gong throughout the firm’s itemizing ceremony on the Hong Kong inventory change on March 3, 2025. Photograph: Reuters alt=Mixue Group’s mascot Snow King struck the ceremonial gong throughout the firm’s itemizing ceremony on the Hong Kong inventory change on March 3, 2025. Photograph: Reuters>
One in two of the 44 new listings of Chinese language corporations in Hong Kong within the first half attracted over 100 instances oversubscription, based on the HKEX’s knowledge. 5 of those IPOs have been overbought by as a lot as 1,000 instances, based on a report launched by Futu Holdings final month. Greater than 71 per cent of the brand new listings closed greater on their debut day, based on the report.
The primary buying and selling days of Mixue Group and Chagee Holdings confirmed the divergence in sentiments for Chinese language corporations in New York and Hong Kong.
The shares of Mixue, which operates a series of food and drinks shops, soared 47 per cent throughout their July debut in Hong Kong. Chagee Holdings, which runs a series of bubble tea shops round Asia, rose 16 per cent when its shares started buying and selling on Nasdaq in April.
For Dai, the selection is obvious.
“Firms will go for listings the place they’ll increase extra money,” he mentioned. “Chinese language corporations’ desire for Hong Kong over the US could change into a serious sample going ahead.”
