Forty-six Chinese firms have secured $16.5 billion through initial public offerings in Hong Kong this year, whereas 16 listings generated $740.9 million in the United States.
In the first part of a two-part exploration of Hong Kong’s initial public offering market, Zhang Shidong and Ao Yulu reveal that more Chinese firms chose to go public in Hong Kong during the first eight months of 2025 compared to New York.
Hong Kong has surpassed the United States as the preferred location for Chinese firms seeking listings, representing a significant achievement for the globe’s fourth-biggest financial hub following ten years of investment in its potential within an expansive and more powerful regional economy.
Up to 46 firms based in China collectively secured HK$118.2 billion (US$16.5 billion) through
initial public offerings
Initial Public Offerings (IPOs) listed on the Hong Kong Stock Exchange this year, as opposed to 16 listings from Chinese firms in the U.S. during the same time frame, which generated only US$740.9 million, based on figures gathered by Bloomberg.
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There is a solid justification for investors rushing to Hong Kong. Newly issued shares have risen by an average of 19.4 percent during their initial trading sessions in the city this year, with certain highly sought-after stocks such as the metabolism-focused pharmaceutical company Innogen Pharmaceutical Group experiencing significant gains.
almost fourfold last week
.
In contrast, new listings in the United States increased by an average of 3.6 percent during the same time frame, as calculated by the Post. Following the usual enthusiasm of the initial days of trading, these stocks subsequently yielded an average return of 5.5 percent.
Hong Kong’s financial markets have seen increased activity this year and indicate ongoing recovery,” stated Kenny Ng, a strategist with China Everbright Securities International. “The
growing rivalry
the relationship between China and the United States has introduced additional uncertainty into
capital markets
That’s why an increasing number of companies are opting to go public in Hong Kong. The potential threat of being removed from U.S. exchanges remains for Chinese stocks, so domestic enterprises often favor the Hong Kong market when dealing with uncertain regulatory conditions.
The contrasting developments highlight the ongoing underlying conflicts between China and the United States, as disputes expand from trade into various other domains such as
technology
military and financial sectors. The increased regulatory oversight under the Trump administration has dampened the enthusiasm for initial public offerings (IPOs) among numerous Chinese firms, including several of the biggest listings globally such as
Contemporary Amperex Technology
(CATL) and
Shein
.
Numerous American investors, including both large-scale investment firms and individual traders, are avoiding Chinese equities traded in New York because of influence exerted by right-wing legislators who criticize supporting financial backing for China. A presidential directive issued by U.S. President Donald Trump in his initial administration aimed at tackling risks posed by stock investments funding communist Chinese defense-related enterprises was later expanded under his successor to encompass technology firms involved in monitoring activities. These directives continue to be active.
The
spat over auditing oversight
Several years back, an event nearly led to the mass removal of approximately 300 Chinese firms worth $1 trillion from stock exchanges, causing numerous IPO hopefuls to hesitate.
What a transformation has occurred in just ten brief years. Prior to Trump’s initial presidency beginning in 2016, New York stood as the stronghold for raising capital, serving as the top choice for listings among all Chinese companies able to do so.
Hangzhou-based
Alibaba Group Holding
the publisher of this newspaper secured $25 billion from the
NYSE in 2014
, becoming the second-biggest global IPO in financial history following Saudi Aramco’s $29.4 billion offering in 2019.
After Trump took office,
US-China relations
worsened due to numerous taxes imposed on Chinese goods, most of which remain active.
With the trade conflict extending into the Biden presidency, ties declined to their lowest point in several decades. Under the strain, a dispute emerged regarding audit supervision for Chinese firms listed in the U.S., leading Gary Gensler, who was then head of the U.S. Securities and Exchange Commission, to
threaten in 2022
to remove all Chinese firms from New York.
The crisis was
averted in late 2022
Following an agreement between the United States and China, Hong Kong will serve as the “neutral location” where the U.S. Public Company Accounting Oversight Board can review the audit documentation of these Chinese firms listed in the U.S.
Nevertheless, the harm to trust had already been inflicted. As the conflict continued, the Hong Kong Exchanges and Clearing (
HKEX
It was adjusting its listing regulations, setting the stage to attract U.S.-listed Chinese firms to secure more capital in Hong Kong.
In November 2019, Alibaba secured $12.9 billion through a share sale in Hong Kong, marking the biggest initial public offering ever seen in the city so far. That
blazed the path
to have a number of Chinese technology firms choose Hong Kong as their new headquarters:
NetEase
raised
$2.7 billion in June 2020
,
Baidu
raised
US$3.05 billion
in March 2021, while
Weibo raised US$193
million in December 2021.
“Dai Ming, a fund manager at Huichen Asset Management in Shanghai, stated that US listings encounter numerous challenges including limitations on investment or funding. ‘Chinese firms might need to go public at lower prices rather than higher ones,’ he mentioned. ‘[This is] why they prefer selling shares in Hong Kong. Both the initial and secondary markets are performing strongly, allowing for premium valuations.’”
Positive changes in investor confidence along with the Hong Kong Exchange’s initiative to expedite approval processes for share offerings from prominent mainland firms have driven an upsurge in Chinese initial public offerings. Within a newly introduced system, enterprises listed on the mainland with a minimum market value of HK$10 billion qualify for a quicker IPO procedure, reducing the evaluation time to just 30 days, as stated by the HKEX and Hong Kong’s financial regulatory authority.
The Chinese producer of lithium batteries used in electric cars, CATL, topped the initial public offering (IPO) sales with a $5.26 billion listing this year in Hong Kong. This was driven by the lithium battery company along with major transactions involving other Chinese firms like Jiangsu Hengrui Pharmaceuticals and Foshan Haitian Flavouring and Food, which helped push Hong Kong into becoming the most active IPO market globally during the first half of the year. According to an analysis published by HKEX at the end of July, IPO activity increased by 695% compared to the previous year, reaching $14.1 billion in the first six months.
More announcements are coming, stated HKEX’s CEO Bonnie Chan Yiting. Between 150 and 200 companies are “in the process,” including several U.S. $1 billion plus major transactions, she mentioned.
said in May
This week, the exchange platform announced its strongest quarter so far, following its mid-term performance.
net profit increased by 39 percent
to HK$8.52 billion.
Three “powerful” groups of businesses are utilizing Hong Kong’s initial public offering market, according to Chan. The first consists of Chinese A-share firms that are registered in Beijing, Shanghai, or Shenzhen aiming to secure more capital abroad through what is known as A-H listings.
The second group consisted of Chinese firms listed in the United States who sought a more convenient listing location nearer to their domestic market and Asian business hours, aiming to reduce political uncertainties. In 2017, the HKEX revised its listing regulations to enable such companies to pursue additional share issues in Hong Kong.
The third category consisted of specialized tech firms, typically startups involved in
artificial intelligence
,
biomedicine
and pharmaceutical producers,
robotics
and a variety of “innovative” sectors included under
Chapter 18C
regarding the Hong Kong Exchanges’ listing regulations as of March 2023.
With this in mind, the HKEX has significant potential for improvement and expansion. Hong Kong has rapidly emerged as one of the world’s leading financial centers.
second-largest IPO destination
since the introduction of biotech companies in New York
Chapter 18A
regarding the pharmaceutical sector in 2018.
Chapter 18B
For special-purpose acquisition companies, also known as “blank check” acquirers, this framework was introduced in January 2022. The chapters have the potential to expand with additional letters as new sectors and financing requirements emerge, according to Chan.
during an interview in
June.
Nevertheless, Hong Kong’s market, which is now the fourth biggest globally with a value of $7 trillion, “has inadequate liquidity” and the ability to handle numerous initial public offerings, especially those involving major firms from the mainland, according to Shen Meng, a director at the Beijing-based investment company Chanson. “Authorities are deliberately delaying the approval process for companies seeking to list in Hong Kong.”
“Beijing aims to back Hong Kong’s position as an international financial hub, yet it can’t permit a large influx of Mainland firms into the city’s funding market, as too many listings could pose risks due to Hong Kong’s constrained liquidity,” Shen stated.
Factors such as investor awareness, market organization, and several regulatory changes—like an update to pricing and initial public offering guidelines implemented last month—have contributed to restoring the IPO flow at the Hong Kong Exchange, as per experts. The engagement of key investors, increased involvement from individual traders, and distinct trading systems have also boosted interest.
Nevertheless, there remain structural distinctions between the Hong Kong and U.S. markets, according to Louis Wong, director at Phillip Capital Management based in Hong Kong. Local initial public offerings frequently attract significant over-subscription from retail investors, which enhances demand within the secondary market, he noted.
Ng from Everbright expressed agreement, stating that the latest adjustments to reduce the allocation percentage have helped boost the robust performance in the secondary market.
“That indicates retail investors typically get a smaller number of shares, leading them to pursue the stock once it begins trading,” Ng stated.
A quarter of the 44 fresh listings of Chinese firms in Hong Kong during the first half saw more than 100-fold subscription rates, based on information from the HKEX. Five of these initial public offerings were subscribed up to 1,000 times, according to a report published by
Futu Holdings
Last month. Over 71 percent of the new listings ended up rising on their first trading day, as stated in the report.
The initial trading sessions of Mixue Group and Chagee Holdings highlighted differing attitudes toward Chinese firms in New York versus Hong Kong.
Mixue, a company operating a network of food and beverage outlets, saw its stock jump 47 percent following its listing in Hong Kong in July. Chagee Holdings, which manages an Asian-based chain of bubble tea shops, experienced a 16 percent increase after its shares started trading on Nasdaq in April.
Dai’s decision is straightforward.
He stated, ‘Businesses will choose listings where they can secure greater funding.’ ‘The tendency of Chinese enterprises to favor Hong Kong rather than the U.S. could evolve into a significant trend moving ahead.’
Additional coverage by Julie Zhang
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