Hong Kong’s IPO boom: Is this a return to previous highs?

When the world’s largest EV battery maker, CATL, raised just over $4.5 billion in Hong Kong in June 2025, it marked more than just a blockbuster listing; it also signaled Hong Kong’s re-emergence as the world’s top IPO venue.

After three years of waning investor confidence, depressed valuations and a sharp drop in deal flow, Hong Kong’s IPO market has staged an impressive comeback, and the city has reasserted itself as a hub for public listings, fueled by a wave of dual-listed Chinese industrial champions, a diversified investor base and sustained regulatory reforms.

This recovery has been reliant on Mainland China firms, and a closer look at the underlying trends suggests that Hong Kong may be entering a new phase of capital market evolution—leaner, more strategic and more tightly interwoven with the economic transformation underway in Mainland China.

“Hong Kong has long been an important global IPO hub, particularly for Chinese companies looking to access international capital,” says Edward Tse, founder and CEO of Gao Feng Advisory Company. “In recent years, China’s tightened domestic regulations, the US-China decoupling and Hong Kong’s own political developments have created headwinds. However, 2024 and 2025 show signs of recovery, driven by A-share companies seeking dual listings and the return of some global institutional investors.”

IPO boom

In H1 2025, the Hong Kong Stock Exchange (HKEX) hosted 42 main board IPOs, raising a total of HK$107 billion ($13.69 billion), surpassing total IPO proceeds for all of 2024 and representing a nearly 700% year-on-year increase. And, according to PwC, the city also ranked first globally in terms of IPO fundraising for the first time since 2019. Equity capital market (ECM) issuance overall, including follow-on offerings and convertible bonds, reached $45.5 billion in H1, representing a 152% increase from the same period last year.

Much of the new momentum has come from A-share listed Mainland firms seeking secondary listings in Hong Kong. In the first half of 2025 alone, eight such companies raised over HK$78 billion (about $10 billion), accounting for roughly 72% of total IPO proceeds during the period.

“Easier approvals, overseas expansion needs and improving sentiment have all played a role,” says Xin Yao Ng, Investment Director on the Asian equities team at ABRDN. “Global interest in China is still lower than before COVID, in part due to structural geopolitical risks.”

Only two of the H1 IPOs originated from non-Greater China issuers—one from Singapore and another from Indonesia—collectively contributing less than 5% of total proceeds. This heavy reliance on Mainland capital highlights Hong Kong’s deepening role as an offshore fundraising hub for China’s industrial and strategic enterprises. The dominance of Chinese Mainland issuers has been a defining feature of the Hong Kong IPO space since at least 2023, when most listings also came from the Mainland amid a slow post-COVID recovery.

International participation in listings, once more prominent, has declined sharply. During the IPO boom years of 2018-2019, Hong Kong hosted a far more diverse issuer base and regularly raised $40-50 billion annually, with significant contributions from US, European and Middle Eastern companies.

“Most of the IPO activity is coming from Chinese Mainland firms, especially those already listed on the A-share market and now pursuing a dual listing in Hong Kong,” says Tse. “These firms are typically in strategic sectors like new energy, semiconductors, healthcare and advanced manufacturing. Capital flows are still heavily weighted toward Mainland investors, including through Southbound Stock Connect.”

The Southbound Stock Connect program is designed to let eligible mainland Chinese investors buy shares listed in Hong Kong using their existing Mainland brokers and infrastructure.

This reflects a broader structural shift: as onshore Chinese capital markets become more crowded and regulatory scrutiny intensifies, many large-cap Mainland companies are looking to Hong Kong as a more flexible, internationalized platform for raising capital. The “A+H” listing structure—with A-shares being Mainland listings and H-shares being Hong Kong listings—provides firms with access to a deeper institutional investor pool and helps boost visibility among foreign investors—especially at a time when arbitrage opportunities between A- and H-shares are growing.

The US previously was the market of choice for international listings, but this has become increasingly problematic in recent years, with a number of Chinese companies delisting from the US and moving to Hong Kong.

Notably, these listings are not confined to a single industry. Rather, they span a range of sectors tightly aligned with China’s strategic policy agenda, including clean energy, AI, semiconductors, pharmaceuticals and biotech, and advanced manufacturing. The contrast underscores how geopolitical shifts and domestic policy realignments have reoriented Hong Kong’s IPO market.

“The rebound in Hong Kong’s IPO market is very much aligned with Beijing’s strategy to internationalize its capital markets,” says Dilin Wu, Research Strategist at broker Pepperstone.

The return of the mega-IPO

The clearest symbol of Hong Kong’s IPO revival came in June with the landmark listing of Contemporary Amperex Technology Co. Ltd. (CATL), the world’s largest electric vehicle (EV) battery maker. The deal raised $4.6 billion—making it the largest IPO globally in the first half of 2025—and saw shares rise as much as 16% on debut.

CATL’s listing is significant not only because of its size, but because it exemplifies the new wave of listings reshaping Hong Kong: high-quality, strategically important companies from the Mainland, tapping global capital for growth and international expansion. It also underscores the growing confidence of issuers that Hong Kong can once again serve as a credible platform for mega-deals.

The CATL offering was followed by similarly successful listings by Hengrui Pharmaceutical, Haitian Flavouring & Food and Sanhua Intelligent Controls—together accounting for four of the world’s ten largest IPOs during the period.

“While the IPOs have generally been successful, most are coming at deep discounts, which makes valuations highly attractive for investors despite lingering concerns,” says Ng.

Sector and policy shifts

Hong Kong’s IPO market has also undergone a sectoral transformation, moving away from internet platforms—once the darlings of the city’s exchange—and toward “hard tech,” healthcare and energy transition, which also align with many national strategic priorities on the Mainland.

In H1 2025, the industrials sector was the top performer in terms of total IPO proceeds, followed closely by healthcare and technology. According to HKEX, healthcare ECM issuance reached its highest level since 2021, with $5.8 billion raised via IPOs and follow-on offerings. Many of these deals were supported by HKEX’s Chapter 18A framework, which allows pre-revenue biotech companies to list.

The technology, media, and telecom (TMT) sector also showed strength, raising $13.7 billion in total ECM issuance, helped by growing investor interest in generative AI, robotics and deep tech.

“Tech, healthcare and consumer sectors are all showing renewed momentum, and confidence is slowly returning,” says Wu. “The exchange’s Chapter 18A pathway has really boosted biotech, while reforms around dual-class shares and Chapter 18C are drawing in more hard-tech and AI-related firms.”

This rotation reflects a deliberate policy alignment with Beijing’s “new productive forces,” which prioritizes advanced manufacturing, semiconductors, healthcare innovation and clean energy. In effect, Hong Kong has become the international capital market arm of China’s industrial upgrade.

Behind the scenes, policy and regulatory shifts have helped enable the IPO rebound. In early 2024, the China Securities Regulatory Commission (CSRC) unveiled reforms aimed at streamlining cross-border listing procedures and accelerating IPO approvals for companies in priority sectors. These moves were designed not only to boost capital market activity but to signal a return to regulatory pragmatism after years of crackdowns.

HKEX has followed suit, finalizing enhancements to its biotech listing regime and launching new initiatives under Chapter 18C to attract specialist technology companies. The exchange has also simplified documentation requirements and improved processing timelines for eligible firms—addressing long-standing complaints about inefficiency and red tape.

“We’ve seen strong policy support from both Mainland and Hong Kong regulators to deepen cross-border financial cooperation,” says Wu. “Fast-track approval channels and streamlined processes are clear signals that Hong Kong is being positioned as the key offshore fundraising hub for China’s strategic sectors.”

Together, these reforms have helped restore confidence among issuers and investors. And while the full effects will take time to unfold, the results this year indicate that Hong Kong has once again become viewed as a viable venue for Chinese firms with international ambitions.

Wider investor behavior in the IPO market, however, reflects a continued measure of caution. While large deals have generally performed well, many smaller offerings have priced at the bottom of their indicative ranges or traded below issue price in early sessions. Market participants remain highly selective, favoring companies with clear sectoral narratives and strong fundamentals.

“Speed, transparency, and market confidence remain the main challenges—compared to other exchanges like NASDAQ or even Shanghai’s STAR Market, Hong Kong’s IPO process is still relatively slow and bureaucratic,” says Tse. “There’s also a perception that Hong Kong’s market is too dominated by Chinese firms, limiting sectoral and geographic diversity. Reforms that streamline listing reviews, attract issuers from Southeast Asia, and deepen the institutional investor base would help make the market more balanced and competitive.”

Hong Kong as the gateway to the world

Despite the rebound and regulatory improvements in some areas, international investors—particularly those based in North America and Europe—remain notably cautious. In addition, some companies, such as CATL, have issued their shares under Regulation S—meaning that they are not registered with the US Securities and Exchange Commission—which prohibits their sale to US citizens.

While valuation levels are attractive and deal quality has improved, concerns around the city’s regulatory environment, political alignment with Beijing and broader geopolitical tensions continue to dampen enthusiasm. For many funds, Hong Kong is no longer viewed as a neutral gateway to China, but rather as an extension of the Mainland’s financial system, with all the strategic, legal and reputational risks that may entail.

The implementation of the National Security Law in 2020 marked a turning point. Although capital markets were not directly involved, the law triggered apprehension among foreign investors, with ESG-focused funds, in particular, flagging governance and transparency issues as potential red flags when allocating capital to the market. The political backdrop has become a key consideration in investment committee discussions, especially among institutions with compliance-driven mandates or exposure to regulatory scrutiny in Western jurisdictions.

“There’s no denying that international investors continue to view Hong Kong through the lens of its political changes. The National Security Law and increasing alignment with Beijing have raised questions about autonomy, data security and press freedom,” says Tse. “That said, for investors focused on Mainland China exposure—particularly in government-backed industries—Hong Kong remains one of the most efficient ways to gain access, so the market remains relevant.”

Furthermore, global funds are still reckoning with the implications of US-China financial decoupling. While some institutional investors remain active in Hong Kong—particularly those focused on Asia-Pacific or emerging markets—the broad trend among large generalist funds has been toward reduced exposure or higher risk premiums. Rebuilding international trust in Hong Kong’s IPO market will require not just strong listings, but a reaffirmation of the market’s openness, legal reliability and institutional independence.

On the economic front, macro headwinds persist. China’s GDP growth, while stabilizing, reached a reported 5% in 2024, and while the government is targeting a similar number this year, it remains below pre-pandemic averages. Elevated global interest rates and weak external demand are also creating drag across Asian markets.

Outside of North America and Europe

Despite the caution shown by many in North America and Europe, the pipeline of pending listings in Hong Kong has grown rapidly—over 200 companies had filed applications with HKEX as of June 2025, up from fewer than 100 in the previous year. A growing number of these are not just China-linked companies, but also Southeast Asian firms and entities backed by Middle Eastern capital looking for a foothold in Asia.

The caveat being that unless significant international or ASEAN-backed issuers translate applications into listings later in the year, the actual capital raised outside China-linked listings is expected to stay well below 10% of the market total.

“If Hong Kong can position itself as an innovation financing hub for all of Asia—not just for China—it can sustain its status as a global financial center,” says Tse. “That would require balancing Chinese capital flows with broader international participation.”

Nevertheless, ASEAN candidates include IFBH, the Thai-based coconut-water company (incorporated in Singapore), which submitted preliminary IPO documents in April while opting for Hong Kong over SGX due to its stronger investor base in Greater China. Further down the pipeline is Capital A, the Malaysian parent company of AirAsia, which is reportedly preparing to list in Hong Kong in June 2026.

Asia-focused issuer interest is matched by growing Middle Eastern sovereign wealth–backed participation. Although no Gulf-based companies have yet fully launched a Hong Kong IPO, Saudi Arabia’s Public Investment Fund (PIF) and Abu Dhabi Investment Authority (ADIA) recently inked cooperation agreements with Hong Kong regulators and financial institutions.

Notably, PIF plans to commit up to $1 billion into a joint Hong Kong-Saudi fund for companies with cross-border Asia-Middle East operations. These steps signal potential future Gulf-backed listings in logistics, clean energy, and supply chain sectors aligned with Belt and Road and Vision 2030 strategies.

The investor profile supporting these pipelines is similarly diversifying. Institutional participation from Southeast Asian sovereign wealth funds, including Temasek Holdings and GIC, has increased. Temasek was a cornerstone investor in J&T Express’s HKEX secondary listing in 2023—a $500 million deal and one of HKEX’s largest ASEAN-origin listings.

“Traditionally, Hong Kong relied heavily on US and European asset managers, but now Middle Eastern sovereign wealth funds and Southeast Asian pension funds are becoming much more active,” says Wu. “Several of this year’s major IPOs have featured top-tier cornerstone investors from the Gulf and Singapore, alongside long-only funds from Europe. This diversification is a healthy trend—it not only brings fresh capital and new perspectives, but also makes the investor base more resilient to geopolitical uncertainty and market volatility.”

In 2025, funds from the Middle East have taken cornerstone allocations in major listings, including in insurer FWD Group and CATL. These developments are helping to offset some of the reduced exposure from Western investors and broadening liquidity sources in the market; however, in value terms, they are still a fraction of the money from Greater China.

The future of HK IPOs

Looking forward, the expectation is that the IPO market will remain active in the second half of 2025 and into 2026. KPMG estimates that Hong Kong could host 80-100 IPOs this year, with total proceeds exceeding HK$200 billion (around $25 billion), assuming market conditions remain stable.

“If Beijing remains supportive and Hong Kong valuations continue to improve, IPO activity will naturally pick up, especially from Chinese companies looking overseas as domestic growth slows,” says Ng.

Yet even with this momentum, few expect a return to the heady days of 2010-2019, when IPO fundraising regularly exceeded $40 billion per year. Instead, the focus has shifted to deal quality, sectoral alignment and sustainable growth.

“The current recovery is being driven more by quality than by quantity—large-cap dual listings, mostly from industrials and strategic sectors,” says Tse. “If Hong Kong can attract more diverse listings, especially in tech and sustainability-related sectors, that could build long-term momentum.”

For that to happen, however, the city will need to continue reforming its listing regime, attracting broader international capital, and cultivating a narrative that extends beyond its traditional identity as China’s offshore window. It will also need to utilize investor protections, transparency and rule-of-law institutions that reassure the global financial community.

“Hong Kong’s IPO market has gone through a full cycle over the past decade—from a golden era to contraction, and now into what feels like an early stage of recovery,” says Wu. “The big question now is whether the city can reposition itself not just as a fundraising window for Chinese firms, but as a true global hub for innovation capital.”