In the first of a two-part series about Hong Kong’s market for initial public offerings, Zhang Shidong and Ao Yulu report that more Chinese companies opted to list in Hong Kong in the first eight months of 2025 than in New York.
Hong Kong has overtaken the US as the new listing venue for mainland Chinese companies, marking a major milestone for the world’s fourth-largest capital market after a decade of betting on its growth in its much larger and stronger hinterland.
As many as 46 China-domiciled companies raised a combined HK$118.2 billion (US$16.5 billion) via initial public offerings (IPOs) on the Hong Kong stock exchange so far this year, compared with 16 listings by Chinese companies in the US over the same period, which raked in a mere US$740.9 million, according to data compiled by Bloomberg.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
There is a good reason for flocking to Hong Kong. New shares have jumped by 19.4 per cent on average in their trading debuts in the city this year, with some particularly hot stocks like the metabolic medicine producer Innogen Pharmaceutical Group jumping almost fourfold last week.
By comparison, new listings in the US have risen by an average of 3.6 per cent over the same period, according to calculations by the Post. After the typical excitement of the first days of trading, those shares have since returned an average of 5.5 per cent.
Guangzhou Innogen Pharmaceutical Group’s founder and chairman Wang Qinghua (left) and chief financial officer Jiang Fan during the company’s trading debut on the Hong Kong stock exchange on August 15, 2025. Photo: InvestHK alt=Guangzhou Innogen Pharmaceutical Group’s founder and chairman Wang Qinghua (left) and chief financial officer Jiang Fan during the company’s trading debut on the Hong Kong stock exchange on August 15, 2025. Photo: InvestHK>
“Hong Kong’s capital market has been more active this year and shows signs of continued recovery”, said Kenny Ng, a strategist at China Everbright Securities International. “The growing rivalry between China and the US has added uncertainty to capital markets, which is why more companies are choosing to list in Hong Kong. There is still the lingering risk of delisting for Chinese stocks in the US, [so] mainland firms tend to prefer the Hong Kong market in the face of such unclear regulatory prospects.”
The diverging trends underscore the persistent simmering tensions between China and the US, with the strife widening beyond trade to other areas including technology, military and finance. The Trump administration’s heightened regulatory scrutiny has spoiled the IPO appetite of many Chinese companies, among them some of the world’s largest offers like Contemporary Amperex Technology (CATL) and Shein.
Robin Zeng Yuqun (fifth from right), the founder and chairman of CATL, struck the ceremonial gong to mark the start of trading at the HKEX Connect Hall in Central on May 20, 2025. Photo: Sun Yeung alt=Robin Zeng Yuqun (fifth from right), the founder and chairman of CATL, struck the ceremonial gong to mark the start of trading at the HKEX Connect Hall in Central on May 20, 2025. Photo: Sun Yeung>
Many US investors, from institutional funds to retail investors, are also steering clear of Chinese stocks listed in New York due to pressure from conservative lawmakers who harangue against providing funds for China. An executive order signed by US President Donald Trump during his first term to “address the threat from securities investments that finance Communist Chinese military companies” was absorbed by his successor into a broader order that included surveillance companies. Those orders remain in effect.
The spat over auditing oversight several years ago, which almost triggered a wholesale delisting of about 300 Chinese companies valued at US$1 trillion, also gave many IPO applicants cause for pause.
How things have changed in 10 short years. Before Trump’s first term starting in 2016, New York was the citadel of fundraising, the preferred listing destination for every Chinese company that could.
Hangzhou-based Alibaba Group Holding, the owner of this newspaper, raised US$25 billion on the New York Stock Exchange in 2014, making it the second-largest worldwide IPO in financial history after Saudi Aramco’s US$29.4 billion sale in 2019.
Global IPO rankings as of August 2025 alt=Global IPO rankings as of August 2025>
After Trump took office, US-China relations deteriorated with a slew of tariffs against Chinese exports, many of which are still in place.
As the trade war spilled over into the Biden administration, relations slumped to the worst level in decades. Amid the tension, a spat broke out over the auditing oversight of US-listed Chinese companies, prompting Gary Gensler, then chairman of the US Securities and Exchange Commission, to threaten in 2022 to expel all the Chinese companies from New York.
The crisis was averted in late 2022 after the US and China agreed to use Hong Kong as the “neutral ground” for the US Public Company Accounting Oversight Board to examine the audit working papers of these US-listed Chinese companies.
Still, the damage to confidence was already done. While the spat was going on, the Hong Kong Exchanges and Clearing (HKEX) was tweaking its listing rules, laying the groundwork to lure US-listed Chinese companies to raise additional funds in Hong Kong.
In November 2019, Alibaba raised US$12.9 billion in a secondary listing in Hong Kong, in the city’s largest IPO to date. That blazed the path for a slew of Chinese tech companies to call Hong Kong their new corporate home: NetEase raised US$2.7 billion in June 2020, Baidu raised US$3.05 billion in March 2021, while Weibo raised US$193 million in December 2021.
“US listings face a lot of hurdles such as restrictions on investments or financing,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. “Chinese companies may have to list at discounts, instead of premiums. [That is why] they are more willing to sell shares in Hong Kong. Both the primary and the secondary market are doing very well and valuations can come with premiums.”
A store of the Chinese tea chain Chagee at a shopping centre in Beijing on July 31, 2025. Chagee’s American Depository Receipts were listed in the US in April. Photo: Reuters alt=A store of the Chinese tea chain Chagee at a shopping centre in Beijing on July 31, 2025. Chagee’s American Depository Receipts were listed in the US in April. Photo: Reuters>
Improved investor sentiment and the Hong Kong exchange’s move to fast track approvals of stock sales by well-established mainland companies have fuelled a boom in Chinese IPOs. Under a new framework, mainland-listed companies with a minimum market capitalization of HK$10 billion are eligible for a faster IPO application process, which would slash the review period to 30 days, according to the HKEX and Hong Kong’s securities regulator.
CATL, the Chinese maker of lithium batteries for electric vehicles, has led IPO sales with a US$5.26 billion flotation this year in Hong Kong. The lithium-battery manufacturer and other mega deals from Chinese companies such as Jiangsu Hengrui Pharmaceuticals and Foshan Haitian Flavouring and Food catapulted Hong Kong to the world’s busiest IPO market in the first half. IPOs surged 695 per cent from a year ago to US$14.1 billion in the first half, according to a report released by HKEX in late July.
There are more to come, said HKEX’s CEO Bonnie Chan Yiting. There were between 150 and 200 companies “in the pipeline”, including many US$1-billion-plus jumbo deals, she said in May. This week, the exchange operator reported its best quarter yet, as its interim net profit soared 39 per cent to HK$8.52 billion.
A lion dance to mark the commencement of trading after the Lunar New Year holiday at the Hong Kong stock exchange on February 3, 2025. Photo: Edmond So alt=A lion dance to mark the commencement of trading after the Lunar New Year holiday at the Hong Kong stock exchange on February 3, 2025. Photo: Edmond So>
Three “formidable” clusters of companies are tapping Hong Kong’s IPO market, Chan said. The first was a group of Chinese A-share companies that are listed in Beijing, Shanghai or Shenzhen seeking to raise additional funds offshore, in the so-called A-H listings.
The second group was the US-listed Chinese companies that needed a listing sanctuary closer to home and Asia’s trading hours to minimise geopolitical risks. The HKEX updated its listing rules in 2017 to allow these companies to seek secondary offerings in Hong Kong.
The third group was specialist technology companies, often start-ups engaged in artificial intelligence, biomedicine and pharmaceutical producers, robotics and a range of “innovative” industries covered by Chapter 18C of the HKEX’s listing rules from March 2023.
In this regard, the HKEX has plenty of room for upgrades and growth. Hong Kong has catapulted to become the world’s second-largest IPO destination after New York for biotech companies since the introduction of Chapter 18A for the pharmaceutical industry in 2018. Chapter 18B for special purpose acquisition companies, or so-called blank cheque acquirers, was rolled out in January 2022. The chapters can grow with more alphabets as new industries and funding needs arise, Chan said during an interview in June.
Still, Hong Kong’s market, currently the world’s fourth largest at US$7 trillion, “lacks sufficient liquidity” and the capacity to accommodate a large number of IPOs, particularly large companies from the mainland, said Shen Meng, a director at the Beijing-based investment firm Chanson. “Regulators are intentionally slowing the [approvals of the] listing process [of companies coming to] Hong Kong.”
“Beijing wants to support Hong Kong’s role as an international financial centre, but it cannot allow an excessive number of mainland companies to rush [into] the city’s fundraising pool as too many listings would be risky with the city’s limited liquidity”, Shen said.
Shanghai and Shenzhen stock indices in Shanghai on April 16, 2025. Photo: Reuters alt=Shanghai and Shenzhen stock indices in Shanghai on April 16, 2025. Photo: Reuters>
Investor familiarity, market structure, and a series of reforms – including a revamp of the pricing and public offering rules earlier this month – have helped revive the IPO pipeline of the HKEX, according to analysts. The involvement of cornerstone investors, broader retail participation, and unique market mechanisms have pushed up demand as well.
Still, there are structural differences between the Hong Kong and US markets, said Louis Wong, director at Phillip Capital Management in Hong Kong. Local IPOs often receive massive oversubscription from public investors, which boosts demand in the secondary market, he said.
Everbright’s Ng echoed the view, saying the recent changes to lower the allocation ratio have contributed to the strong aftermarket performance.
“It means retail investors tend to receive fewer shares, prompting them to chase the stock after it starts trading,” Ng said.
Mixue Group’s mascot Snow King struck the ceremonial gong during the company’s listing ceremony at the Hong Kong stock exchange on March 3, 2025. Photo: Reuters alt=Mixue Group’s mascot Snow King struck the ceremonial gong during the company’s listing ceremony at the Hong Kong stock exchange on March 3, 2025. Photo: Reuters>
One in two of the 44 new listings of Chinese companies in Hong Kong in the first half attracted over 100 times oversubscription, according to the HKEX’s data. Five of these IPOs were overbought by as much as 1,000 times, according to a report released by Futu Holdings last month. More than 71 per cent of the new listings closed higher on their debut day, according to the report.
The first trading days of Mixue Group and Chagee Holdings showed the divergence in sentiments for Chinese companies in New York and Hong Kong.
The shares of Mixue, which operates a chain of food and drink stores, soared 47 per cent during their July debut in Hong Kong. Chagee Holdings, which runs a chain of bubble tea stores around Asia, rose 16 per cent when its shares began trading on Nasdaq in April.
For Dai, the choice is clear.
“Companies will go for listings where they can raise more money,” he said. “Chinese companies’ preference for Hong Kong over the US may become a major pattern going forward.”
