Effective Reforms and Capital Inflow Make Hong Kong’s IPO Market the World Leader

In the first half of this year, Hong Kong’s capital market once again demonstrated its remarkable resilience and institutional strength.  Thanks to the robust growth of its initial public offering (IPO) market, Hong Kong outperformed other major international markets, ranking first globally in terms of the amount of funds raised through IPOs.  This positive momentum has carried into the early second half of the year.  There were a total of 53 new listings in the first seven months this year, raising approximately HK$127 billion in total, representing a year-on-year increase of more than 600% and exceeding the total annual fundraising in each of the past three years.  There are currently over 210 active listing applications.  Looking back on the global IPO market’s performance in the first half of the year, by contrast, the total equity funds raised grew only by around 10% year-on-year whereas the number of transactions dropped by 5%.  The performance of the Hong Kong market has clearly surpassed that of the global market, and has therefore attracted fervent attention from international investors.

None of this is achieved by chance, but rather the fruits of Hong Kong’s persistent efforts in institutional development, robust regulation and market reforms over the years, serving as a strong testament to the collaboration between the Government and the market in promoting reform and innovation.  Based on these impressive figures, we envisage that more new developments and breakthroughs of Hong Kong’s capital market are in the pipeline in the second half of the year.  Regarding the IPO market in the first half of the year, let me share with you some of my observations and conclusions.

 

The dual engines of “A+H” shares and innovation and technology enterprises

Among all new listings in the first half of this year, four raised over $5 billion each, while seven involving “A+H” shares raised about $77 billion in total.  This shows that Hong Kong not only possesses the breadth and depth to support the listings of large enterprises, but also serves as a key bridge between the Mainland and international capital markets.  Upon listing, the H-shares of these enterprises have been trading at generally smaller discounts compared with their A-shares, with some even trading at a premium.  This reflects the strong demand among international investors to invest in these shares through the Hong Kong stock market.

It is worth mentioning that the outstanding performance of Hong Kong’s IPO market of late is attributable not just to a single sector, but to a highly-diversified mix of industries, covering areas of manufacturing, finance, consumer goods and healthcare, as well as technology, media and telecommunications (TMT) and new energy, reflecting a mature and balanced market ecosystem.

Healthcare enterprises stood out with their strong performance in the Hong Kong stock market.  A total of ten enterprises in the healthcare sector were successfully listed, raising as much as $16.3 billion in total.  Six of them gained access to the Hong Kong market through the dedicated listing channel for biotech companies under Chapter 18A of the Listing Rules.  The Hang Seng Biotech Index rose by nearly 90% this year, demonstrating that innovative drugs and high-end medical technology are becoming the new focal points of the capital market.

 

Fully accelerated development with diversified international participation

Meanwhile, a number of enterprises with international backgrounds, including a beverage and food company with Thai roots, a disease screening company founded in Singapore and an alumina manufacturer in Southeast Asia, have successively got listed in the Hong Kong stock market, further reinforcing Hong Kong’s position as a preferred listing venue for international enterprises.  These enterprises have chosen to go public in Hong Kong precisely because they attach great importance to the city’s key strategic values in enhancing global brand images, expanding international capital investment and accessing the Mainland market.

The vibrancy of Hong Kong’s IPO market is reflected not only in the profile of companies listed, but also in the extensive participation of international investors.  In the first half of 2025, the cornerstone investments and institutional placements of IPOs attracted active participation of long-term funds, private equity funds, hedge funds and sovereign wealth funds from North America, Europe, the Middle East and other regions.  The retail stock market was also buoyant, with some new shares recording high oversubscription rates, creating a vibrant overall market atmosphere.  This investment ecosystem, which puts equal emphasis on institutional and retail participation, not only enhances market liquidity, but also reinforces the institutional advantage of multi-level and extensive participation in Hong Kong’s capital market.

 

Policy support for institutional development to drive steady market growth

The strong performance of Hong Kong’s IPO market is not solely driven by short-term market sentiment; instead, it is the achievement through years of sustained institutional innovation and policy support.  Last year marked the tenth anniversary of mutual market access between the Mainland and Hong Kong.  Since the reform of the listing regime in 2018, the stocks of various companies with different voting right structures and pre-revenue biotech companies listed in Hong Kong have been included under Southbound Trading of Stock Connect.  In March 2023, we further expanded the scope of Southbound Trading of Stock Connect to cover securities of eligible international enterprises primarily listed in Hong Kong, thereby facilitating diversification in global asset allocation by investors while attracting quality and high-profile overseas enterprises with close business connections with the Mainland to list in Hong Kong.  Building on the introduction of the listing mechanism for specialist technology companies, the Hong Kong Exchanges and Clearing Limited (HKEX) and the Securities and Futures Commission launched the dedicated technology enterprises channel (TECH) in May this year to serve specialist technology and biotech companies with the provision of targeted guidance for these innovative companies.

Subsequently, the HKEX officially implemented a series of optimisation measures regarding IPO price discovery and open market reform this month.  The new measures, which include requiring an issuer to allocate at least 40% of its shares on offer in an IPO to the bookbuilding placing tranche and introducing an alternative mechanism for the public subscription tranche, aim at enhancing the robustness of the IPO pricing and allocation mechanisms while striking a balance between the demand from local and international investors for IPO subscription.  Furthermore, a new initial free float requirement has been introduced to ensure the availability of sufficient liquidity and a stock trading base upon listing.

These reform measures have not only enhanced the robustness of the system, but also contributed to the effective allocation of capital and promoted balance and mutual trust among market participants, thereby laying a solid foundation for the sustainable growth of the market.

 

Capital market – a driving force behind Hong Kong’s high-quality economic growth

According to the advance estimates, Hong Kong’s real gross domestic product grew by 3.1% year-on year in the second quarter of this year, with the financial and related business services sectors demonstrating strong vibrancy driven by the consistently buoyant capital market.  Hong Kong’s development trajectory remains stable and positive, and the capital market is undoubtedly the core driving force behind the city’s high-quality economic growth.

In an era of shifting global trade dynamics and accelerating fintech revolution, we will continue to refine institutional designs, promote regulatory innovation, enhance market efficiency, and integrate emerging fields such as fintech and green finance, with a view to cultivating a more competitive capital market ecosystem.  This will ensure that Hong Kong sustains its position as a financial hub in Asia, as well as a premier destination for high-quality enterprises and patient capital worldwide.



12 August 2025