IPO boom a stepping stone for Hong Kong to become region’s capital hub

As geopolitics, industrial policy and shifting capital flows reshape the landscape, Hong Kong’s IPO boom is part of a regional growth story

By Gordon Crosbie-Walsh, Chief Executive Officer, Asia, Equities First Holdings

7 August 2025

About a year ago, the question was whether Hong Kong’s initial public offering (IPO) market could recapture its heyday. At the time, I wrote that a sustained recovery could restore sentiment, rekindle risk appetites and help channel capital to China’s most ambitious enterprises. Encouragingly, the recovery is well under way.

Hong Kong is on track to be the world’s top IPO venue this year. The renewed activity rests on strong foundations: access to the right sectors, regulatory reforms and deepening liquidity. It also signals Hong Kong’s ability to provide the capital for a transforming global economy.

China’s export engine is undergoing a structural shift from low-cost assembly lines to world-leading hi-tech manufacturing. Companies at the forefront of this transformation are turning to Hong Kong to raise capital.

The US$5.3 billion secondary listing by Contemporary Amperex Technology (CATL) in May – the largest globally this year – did more than raise funds. It confirmed Hong Kong’s importance in the global expansion of China’s industrial champions. More recently, Apple supplier Lens Technology took a similar route. Shein, the fast-fashion giant, is reportedly preparing to follow.

What is drawing these companies to Hong Kong over New York, London or Shanghai? Listing aspirants report faster approvals, clearer regulatory paths and access to both international and domestic capital in Hong Kong. Waiting times for A-share IPOs that can stretch a year or more led many would-be issuers to turn to Hong Kong. A more protectionist stance in the United States has also made its stock markets less appealing, particularly for Chinese and other emerging-market issuers.

Regulatory reforms – including lower thresholds that allow specialist technology firms to come to market sooner – have repositioned Hong Kong’s bourse as a platform for growth. The launch of the Technology Enterprises Channel this year, with tailored listing criteria for tech and biotech firms, will reinforce Hong Kong’s role as a platform for innovation.

Investors, both foreign and domestic, are responding in kind. Global investors find it easier to access Chinese equities via Hong Kong, without the need to navigate mainland capital controls or complex brokerage arrangements. They are slowly rebalancing away from dollar assets due to unpredictable US policy, trade frictions and longer-term decoupling trends.

For Chinese investors dealing with yuan depreciation and a slowing domestic economy, Hong Kong provides exposure to Chinese technology and finance. This year, Hong Kong shares outperformed their mainland peers by the widest margin since 2008, attracting more capital through the Stock Connect schemes.

Hong Kong now needs to build on these successes to secure its place as the region’s capital-raising hub in the next era of trade and capital flows.

China’s outbound trade and investment flows are increasingly directed towards Southeast Asia and the Middle East. Exports to the US now account for just 3 per cent of China’s gross domestic product, declining from historical levels. Chinese companies are looking for funds for this global expansion: setting up factories, diverting supply chains and building regional brands. Listing in Hong Kong enables them to raise capital in a global currency close to home.

This paper anticipated as much in April, as Western markets became less welcoming not only for mainland Chinese firms but also Asian companies embedded in global supply chains.

Hong Kong’s potential could go beyond its traditional role as a “superconnector” between mainland China and the rest of the world as it becomes an important fundraising venue for companies around the region. Bonnie Chan Yiting, CEO of Hong Kong Exchanges and Clearing, has been clear about her ambition to attract secondary listings from regional players. That view has been echoed by Financial Secretary Paul Chan Mo-po, who noted recently that companies from the Middle East and Southeast Asia were among IPO applicants for the second half of the year.

This mirrors the trend in the previous decade when brands like L’Occitane, Prada and Samsonite listed in Hong Kong to fund their China expansion.

This time, the flows may run in a different direction.

In a world where growth is increasingly driven by regional demand and powered by regional capital, Hong Kong must be able to support the next generation of Asian champions with a full range of funding solutions, from public equities to private credit and all forms of alternative capital.

Hong Kong has a limited track record on this front, but there are signs of progress. There are 115 listed companies whose country or territory of domicile is outside China, accounting for a modest 2.6 per cent of the exchange’s market capitalisation – around US$140.3 billion. This year, three such IPOs have listed in the city, raising about US$592.9 million.

For retail and institutional investors alike, the IPO boom presents an opportunity to participate in Asia’s next growth cycle. With IPO subscription levels soaring and post-listing returns exceeding 30 per cent, the short- to medium-term opportunities are compelling. At the same time, structural shifts – such as China’s pivot to “new productive forces” and Hong Kong’s emergence as a tech-forward exchange – suggest a long-term upside.

In a landscape being reshaped by geopolitics, industrial policy and shifting capital flows, Hong Kong’s IPO boom is more than a local rebound – it’s part of a regional growth story. As interest rates ease and investor sentiment improves, the revival could stretch well into the new year.

July 9 was a bumper day for listings in Hong Kong, with five companies ringing the gong. With more than 200 companies in the IPO pipeline, we can look forward to a lot more gong music in the second half.

This article was first published in the South China Morning Post, Opinion section, on 29 July 2025.

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