Hong Kong’s equity markets are finally waking upand the numbers speak for themselves. IPO and follow-on deal volume has surged to $26.5 billion so far in 2025, up from just $3.8 billion a year ago. That’s the highest total since 2021. Chinese giants are fueling the revival. CATL led with a $5 billion listing in Maynow trading 18% above its Shenzhen counterpart. Xiaomi (XIACY) and BYD (BYDDF) chipped in with more than $11 billion in fresh equity earlier this year. A Hong Kong listing for Shein could be next. For a city that’s spent the past few years on the sidelines, this could be the inflection point.
What’s driving it? A mix of geopolitics, valuations, and capital rotation. With U.S.-China tensions intensifying, Chinese firms appear to be shifting their fundraising back homeor at least closer to it. There’s a broader rebalancing happening in global capital, said James Wang of Goldman Sachs. That shift isn’t just about avoiding scrutiny. Investors are also hunting for upside in places where valuations still look attractive. Hong Kong, after years of underperformance, is finally back on the radar. And the momentum is real enough that Morgan Stanley’s Cathy Zhang is advising clients to move now while the window’s open.
Still, it won’t be a smooth ride. As Shi Qi at China International Capital Corp. pointed out, this isn’t a market rally you can sleepwalk through. But the ingredients are lining up: successful debuts, valuation premiums over mainland shares, and more regulatory support. Pharma name Jiangsu Hengrui briefly traded above its A-shares on debutsomething we haven’t seen often. If this continues, more mainland-listed firms may pivot to Hong Kong for their next raise. And for investors, it’s a rare chance to front-run a shift that could reshape Asia’s capital markets in 2025 and beyond.
This article first appeared on GuruFocus.
