Stock Performance Trends in Hong Kong’s IPO Market
BEIJING — Hong Kong has made headlines as a leading hub for initial public offerings (IPOs), but there’s a concerning trend regarding the performance of these new stocks.
Last year, the Hong Kong Exchange led the world in IPO funding, outpacing the New York Stock Exchange and Nasdaq. Reports from KPMG indicate that the momentum from 2025 has persisted into the first quarter of this year. Currently, over 600 companies are waiting for their listing on the Hong Kong exchange.
Nonetheless, the performance of Hong Kong IPOs is often disappointing. Data from Wind Information reveals that among the 179 stocks listed since January 2025, about half have seen their prices drop over the last three months. In contrast, the Hang Seng Index dipped slightly during the same timeframe, whereas the FTSE Renaissance Global IPO Index actually increased by over 10%.
The situation is even more pronounced for stocks in the Stock Connect program, which allows mainland Chinese investors to buy directly. For instance, of the 33 Hong Kong-listed stocks that joined the program on March 9, more than half experienced significant price increases—some even doubled. Notable gains were seen in companies like AI startup Deepexi, which, at one point, saw its value rise over 300%. However, all these companies have since dropped over 10%, with Deepexi falling 51% as of June 3.
Authorities in Beijing have noticed these fluctuations. A report from the government-aligned Securities Times highlighted concerns about the rapid price increases and subsequent declines for certain Hong Kong IPOs.
Leonid Mironov, a portfolio manager at Gabekal, explained that many H-share listings in Hong Kong also trade as A-shares on the mainland. He noted that, after entering the Stock Connect, funds often shift back to A-shares, which are generally more affordable.
Ding Wenjie, an investment strategist at China Asset Management, mentioned that some funds in Hong Kong are using inclusion in the Connect program to boost profits.
Goldman Sachs projected this spring that Hong Kong listings could raise around $60 billion in 2026, almost double the $36 billion from 2025. Recently, the investment firm revised its outlook, favoring mainland A shares instead of H shares to enhance exposure to artificial intelligence hardware.
According to Benjamin Cavender, managing director of China Market Research Group, low fees, insufficient funding, and intensifying competition suggest that parts of China’s financial sector are under strain, likely reflecting a short-term focus.
The Hong Kong Exchange stated that various factors influence stock price performance. Looking ahead, the market is set for more tests, as Knowledge Atlas Technology is anticipated to launch its AI model Zhipu via Connect soon, and another AI firm, Mini Max, may also join later this summer. Both firms were listed in Hong Kong in January.
