Hong Kong’s equity capital markets activity roared back to life in the first half of 2025, driven by global investors sharpening focus on China as the city awaits the possible Shein initial public offering in the second half.
Big ticket capital raisings and a rush of “A to H” share deals, where companies already listed on mainland Chinese markets list in Hong Kong, helped revive flatlining markets and led to the strongest first half since 2021.
Fast fashion giant Shein is working to list in Hong Kong before the end of the year, Reuters reported in May, citing sources with direct knowledge of the matter.
A Shein listing would help Hong Kong re-establish its credibility as a global fundraising centre as a time of major volatility created by US trade policy changes.
Hong Kong’s Hang Seng Index is up 21.2 per cent year-to-date, making it one of the best performing major markets in the world, despite the tariff negotiations between China and the United States.
“The new era has come which is a more divided world – I think that’s reality we are facing,” said James Wang, head of Asia ex-Japan equity capital markets at Goldman Sachs.
“Arguably, there are more investment opportunities. It’s a structural change and there is going to be capital outflowing from the US and inflows into the Asian region.”
Across Asia, including Japan, there was a 15.3 per cent increase in total equity issuance in the first half to US$116.2 billion, up from US$100.7 billion in the same period last year, according to LSEG data.
There were US$12.8 billion of combined proceeds from IPOs and second listings in Hong Kong in the first half, up more than eight-fold on the same time last year, the data showed.
But the US$2.9 billion raised from IPOs in Hong Kong during the half, while up from last year’s US$1.7 billion, remained well below the US$8.5 billion raised on the Nasdaq in New York, according to LSEG data.
Despite the Hang Seng’s rally, investors remain nervous buying into IPOs as volatility continues to rack global markets.
“An A to H listing is like a follow on, there is a price benchmark, but for standalone IPOs where you don’t have that price benchmark,” Wang said.
“The last round’s valuation is not a benchmark. For people to feel comfortable to write a large ticket they need to get comfortable the market is there to support them, not just that they feel the valuation is OK.”
Global investors buying back into China and participating in major deals like battery maker CATL’s US$5.3 billion listing and electric vehicle makers Xiaomi and BYD raising a combined US$11 billion helped drive equity transactions, dealmakers said.
“Many global investors have reduced underweight positions and are taking advantage of capital market liquidity events to increase exposure,” said Sunil Dhupelia, JPMorgan’s co-head of equity capital markets for Asia-Pacific.
“Engagement from global investors on our Hong Kong and mainland China pipeline is the highest it has been for some time,” he said.
China in May cut benchmark lending rates for the first time since October as authorities worked to ease monetary policy to shield the economy from any Sino-US trade war impact.
China’s Premier Li Qiang said on Thursday the world’s second-largest economy remains the biggest driving force for the global economy and that policymakers would take “forceful steps” to boost domestic consumption.
“I think investors are also taking some comfort that China still has chips in their bag that they can play to support the market, such as supportive policy measures,” said Aaron Oh, UBS’s head of equity capital markets for Asia Pacific.
“And China has shown resiliency thus far despite the global trade uncertainties.”
Goldman Sachs topped Asia’s equity capital market league tables in the first half, ahead of Morgan Stanley and JPMorgan, the LSEG data showed.
