Bell during the listing ceremony of Contemporary Amperex Technology Co. Ltd. (CATL) on the Hong Kong Stock Exchange in Hong Kong, China, on Tuesday, May 20, 2025.
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BEIJING – Hong Kong may be the world’s leading market for initial public offerings, but it is also suffering from a growing trend of weak stock performance from such issuances.
The Hong Kong exchange was the first in the world in terms of IPO funds raised last year – surpassing the New York Stock Exchange and Nasdaq, which came second and third respectively – according to KPMG, noting that the strong momentum in 2025 continued in the first half of this year. More than 600 companies are waiting to register on the Hong Kong exchange as of Thursday, according to its website.
However, Hong Kong IPOs generally do not perform well. Of the 179 listings as of January 2025, about half have traded lower in the past three months, according to Chinese financial data firm Wind Information. That compares with a slight decline in the benchmark Hang Seng index and gains of more than 10% for the FTSE Renaissance Global IPO Index over the same period.
For those on Stock Connect, a program that allows average Chinese to invest directly, the performance difference is even worse. Of the 33 Hong Kong-listed stocks that joined Connect on March 9, more than half doubled in price between their IPO and the last trading day before the listing. Eight, including AI startup Deepexi, which is up more than 300% in that time.
All eight groups are down 10% or more since then. Deepexi is down 51% since June 3.
Beijing is taking notice. The government-backed Securities Times on May 29 was the latest to highlight concerns about sharp rallies and subsequent declines in some Hong Kong IPOs.
Most of the listings in Hong Kong shares of Hong Kong shares are already sold as A shares in China, notes Leonid Mironov, portfolio manager at Gavekal. The downside of cheap A shares is that they usually get cheaper after the shares join the Connect program, he said.
Ding Wenjie, global investment strategist at China Asset Management Co., said the firm has seen other funds in Hong Kong capitalize on Connect’s investments as a way to generate more returns.
Goldman Sachs this spring predicted that companies will raise about 60 billion this year from Hong Kong listings, almost twice the $36 billion raised in 2025. The investment firm on Wednesday downgraded Hong Kong H shares in favor of China A shares for greater exposure to Artificial Intelligence hardware games.
Low interest rates, weak capital accumulation and intensifying competition mean “there has undoubtedly been pressure on parts of China’s financial sector,” Benjamin Cavender, managing director at China Market Research Group, told CNBC. “This probably put the focus on short-term performance.”
HKEX said in a statement to CNBC that share price performance is influenced by a range of factors.
The following market tests: Atlas Technology InformationAI model company Zhipu, is one of the top stocks expected to start trading in Shanghai on Connect on Monday, while the AI company is with it. MiniMax may join later this summer. Both companies listed in Hong Kong in January.
