^{Photo: South China Morning Post}

Hong Kong’s IPO Revival: What’s Fueling the Market's Stunning Turnaround in 2025

After years of sluggish IPO activity and investor hesitance, Hong Kong’s equity capital markets are roaring back to life. In the first half of 2025, the city’s IPO volume surged nearly eightfold, with $14 billion raised across 43 new listings, making it the strongest half-year performance since 2021, according to Dealogic.

This marks a massive jump from the $1.8 billion raised in H1 2024, and positions the Hong Kong Stock Exchange (HKEX) to surpass Nasdaq and NYSE as the world’s top listing venue this year. PwC forecasts as many as 100 IPOs in the city for 2025, with total proceeds expected to exceed $25.5 billion.

A Market Reignited: Why the Turnaround?

1. Policy Tailwinds from Beijing

After a multi-year slump, Beijing’s regulatory shift has breathed new life into Hong Kong’s IPO pipeline. The China Securities Regulatory Commission (CSRC) fast-tracked offshore listing approvals for high-tech and consumer-facing firms, while Hong Kong regulators launched the “Technology Enterprises Channel” in May to support IPOs in AI, biotech, and digital sectors.

In February, President Xi Jinping made a rare direct appeal to private businesses, signaling government backing for corporate expansion and innovation. This marked a key turning point in business sentiment.

2. Muted Mainland Markets and Delisting Fears

With A-share listings in China slowing and the CSI 300 index nearly flat year-to-date (+0.2%), many companies are opting for Hong Kong to tap into more liquid capital pools and access international investors.

Meanwhile, persistent concerns over U.S. delistings—especially under a potential second Trump administration—have made Hong Kong a safer alternative for Chinese firms looking to hedge geopolitical risks.

Big Names, Big Numbers: Who’s Leading the Charge?

• Contemporary Amperex Technology Co. Ltd. (CATL) raised over $5 billion through a secondary listing in Hong Kong this May — the largest dual listing globally in 2025 so far.
• High-profile primary listings included Mixue Group, Guming Holding, and ride-hailing platform Caocao Inc.
• More than 200 IPO applications are currently in HKEX’s pipeline, with over 40 being A-to-H dual listings, per Wind Information.

These moves are not just about capital — they are part of broader corporate strategies to expand globally, diversify manufacturing, and tap into new markets amid growing competition at home.

Mainland Liquidity Fuels Hong Kong Rally

One of the underappreciated forces behind this IPO boom is surging liquidity from mainland investors.

The Southbound Stock Connect program, which allows Chinese investors to buy Hong Kong stocks, saw record net inflows in Q2, the highest since the scheme’s inception in 2014. According to estimates by HSBC’s Steven Sun:

• Southbound trades now make up nearly half of HKEX’s daily turnover
• Mainland funds are chasing AI-driven rallies and major capital raises

In contrast, U.S. investor participation has remained muted due to regulatory uncertainties and U.S.–China trade tensions.

A Broader Strategic Pivot: Why Firms are Choosing Hong Kong

Chinese firms are increasingly attracted to Hong Kong’s more inclusive listing framework for emerging industries, such as:

• Artificial Intelligence
• Clean Energy and EV
• Biotech
• Digital Consumption

Hong Kong offers access to global currency markets, particularly the fungible Hong Kong dollar, which supports international expansion more effectively than the tightly controlled Chinese yuan.

“As companies look to expand internationally, raising funds in Hong Kong is a natural step,” said Eugene Hsiao, head of China equity strategy at Macquarie. “It allows them to raise capital in a market that understands China but is globally integrated.”

A Shot in the Arm for Global Investors

From a global perspective, Hong Kong’s comeback offers renewed opportunities for institutional investors:

• Exposure to high-growth Chinese tech and consumer companies
• Reduced political risk compared to U.S. listings
• Participation in early-stage growth stories backed by policy support

Morningstar’s Lorraine Tan believes the recent wave of listings is skewed toward high-quality, less geopolitically exposed companies, making them ideal for long-term global investors seeking growth beyond Western markets.

A Red-Hot Rebound with Long-Term Implications

Hong Kong’s IPO resurgence is more than just a statistical rebound — it signals a deep structural shift in the global capital landscape. With Beijing loosening restrictions, mainland liquidity flowing freely, and U.S. tensions still simmering, Hong Kong has repositioned itself as Asia’s preeminent listing destination.

The second half of 2025 will be key. If momentum continues, Hong Kong could not only top the IPO charts for the year but also cement its role as the go-to global hub for Chinese firms aiming to scale internationally in a politically safer, financially robust environment.