Hong Kong is back in the game. After years of silence, the city’s IPO machine is firing on all cylinderspowered by a surge in Chinese capital raising. CATL, China’s battery giant, led the way with a $5.2 billion listing to fund its Hungarian factory supplying Mercedes and BMW. BYD (BYDDF), a major Tesla (NASDAQ:TSLA) competitor, raised $5.6 billion to fuel global expansion. In total, over $45 billion has been raised through listings and placements this yearup from just $6.3 billion a year ago. The Hang Seng Index is up 24%, outpacing US and European markets. Equity desks at Morgan Stanley, Credit Agricole, and local powerhouses like Citic are packed. One law firm partner said they’re turning away deals and hiring to keep up with the pipeline. The momentum looks durable, with more than 200 IPOs in the works and a rebound in office leasing that’s luring firms like Jane Street, Ardian, and Arga back into the city.
But this isn’t just a story about capital. It’s a story about control. Beijing is tightening its gripand Hong Kong is now the bridge for China to access global markets, not the other way around. Chinese regulators have slowed US listing approvals while actively loosening capital controls in Hong Kong. That shift has tipped the scales: nearly 70% of new listings this year come from mainland firms already listed onshore, up from just 2% in 2023. Officials are pushing harder than evereasing float rules, accelerating cross-border flows, and publicly calling for market reform. Behind the scenes, Wall Street firms are jumping in, but also navigating landmines. When CATL tapped JPMorgan and Bank of America as lead underwriters, US lawmakers lashed out, warning of significant reputational and regulatory risks. Jamie Dimon stood his groundbut subpoenas followed. The pressure isn’t letting up.
And that’s the catch. This boom isn’t just cyclicalit’s strategic. China’s corporate heavyweights, facing deflation and domestic saturation, are expanding overseas. Factories. M&A. Global brand building. Hong Kong is the fundraising pit stop. But the tighter the city links itself to Beijing’s playbook, the more exposed it becomes. With Trump extending a pause on tariffs (for now) and trade talks warming up, markets are breathing easier. But risks remain. Washington sanctions are stacking up. Multinationals are using burner phones. And Beijing’s political shadow looms larger than ever. One former Wall Street chairman put it bluntly: this isn’t a revival of Hong Kong’s global statusit’s a repositioning. A rally, yes. But one with strings attached.
This article first appeared on GuruFocus.
