Hong Kong’s IPO Surge Grapples with Post-Listing Performance Declines

A gong during the listing ceremony of Contemporary Amperex Technology Co. Ltd. (CATL) at the Hong Kong Stock Exchange in Hong Kong, China, on Tuesday, May 20, 2025.

BEIJING — Hong Kong has maintained its position as the world’s leading market for initial public offerings in terms of funds raised, surpassing the New York Stock Exchange and Nasdaq in 2025, according to KPMG. Despite strong first-quarter momentum and over 600 companies awaiting listing, a growing number of newly listed stocks are underperforming post-debut.

Data from Wind Information shows that of 179 listings since January 2025, roughly 50% have declined over the past three months, lagging behind the Hang Seng Index and the FTSE Renaissance Global IPO Index, which gained over 10% in the same period.

Stocks included in the Stock Connect program, which facilitates mainland Chinese investment, exhibit even steeper declines. Among 33 Hong Kong-listed stocks added to the program on March 9, over half had more than doubled in price between their IPO and pre-inclusion trading, with eight—including AI startup Deepexi—rising over 300%. All eight have since fallen by 10% or more, with Deepexi dropping 51% by June 3.

Mainland state media, including the Securities Times, have recently flagged concerns over volatile IPO performances, reflecting heightened scrutiny from Beijing. Analysts note that dual-trading of Hong Kong H-shares and mainland A-shares often leads to capital migration to the more affordable A-share market post-Connect inclusion.

Portfolio manager Leonid Mironov of Gavekal explained that this dynamic creates “capital retreats to often cheaper A shares” after stocks join the Connect program. Ding Wenjie, an investment strategist at China Asset Management Co., observed that some funds exploit the Connect inclusion for short-term gains.

Goldman Sachs projects about $60 billion in Hong Kong IPO fundraising this year, nearly double 2025 levels. The firm recently reduced its outlook for H-shares, favoring A-shares for broader artificial intelligence sector exposure.

Benjamin Cavender, managing director at China Market Research Group, pointed to intensified competition and low fees as key pressures on China’s financial sector, driving a focus on short-term results. Hong Kong Exchanges and Clearing (HKEX) acknowledged in a statement that share performance is influenced by multiple factors.

Upcoming tests include Knowledge Atlas Technology, developer of the Zhipu AI model, which is set to debut in Shanghai via the Connect on Monday, followed by fellow AI firm MiniMax later this summer. Both listed in Hong Kong in January.

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