Ever because the financial reform and opening of Chinese language Mainland markets within the Eighties, Chinese language Mainland enterprises have lengthy desired to lift funds by way of fairness and bond issuance to overseas buyers. Even amidst the height of onshore home development, Chinese language Mainland companies have been actively engaged in offshore listings to entry overseas capital swimming pools backed by onerous (fully-convertible) currencies, such because the US greenback.
This submit builds on my earlier evaluation of Hong Kong SAR market’s IPO resurgence. On this piece, I look at the broader forces behind the phenomenon, together with how shifting laws, US–China tensions, and Hong Kong Exchanges and Clearing Restricted (HKEX) reforms are reshaping international capital flows and channeling Chinese language Mainland listings again to Hong Kong SAR.
Up till 2025, greater than 300 Mainland Chinese language firms had listed abroad and raised tons of of billions of US {dollars} in complete. In 2020, through the COVID-19 pandemic, which marked the final peak of IPOs, firms listed on the HKEX raised round $50 billion from IPO proceeds, pushed primarily by secondary listings within the Hong Kong market from already US-listed Chinese language Mainland tech giants like JD and NetEase.
From Wall Road to Central: How China’s Capital Flows Are Rebalancing
For many years, international IPO exercise has been dominated by the NYSE and NASDAQ, exchanges that collectively account for over $50 trillion in market capitalization. Ranked #1 and #2, these US exchanges surpass the full market cap of the remainder of the highest 10 inventory exchanges on this planet. Certainly, for many years, the NYSE and Nasdaq have dominated the worldwide IPO market. America possesses a mix of structural, financial, and institutional benefits that entice international firms, together with these from the Chinese language Mainland, which have constantly demonstrated a robust urge for food for US listings.
The HKEX, regardless of being outranked by the US market in each issuance quantity and proceeds, stays among the many main inventory exchanges globally, incessantly rating among the many prime three exchanges worldwide when it comes to IPO proceeds, and is undoubtedly the regional gateway for the Higher China market.
Chinese language Mainland firms looking for offshore capital have sometimes confronted a binary alternative: America (NYSE/Nasdaq) or Hong Kong SAR (HKEX). The US market was typically most well-liked, particularly for tech and development firms, as a result of its international visibility, valuation premiums, and deep liquidity.
Chinese language Mainland companies not often contemplate main inventory exchanges in different markets, reminiscent of the UK, Continental Europe, India, or Japan, due to a mixture of components, together with a scarcity of investor familiarity, valuation disadvantages, cultural boundaries, and political components.
Supply: SEC, HKEX, LSEG. Notes: 1. The US consists of each the NYSE and the Nasdaq; 2. Proceeds embrace solely IPO issuances, excluding switch and introduction.
For international buyers, this rebalancing means new entry factors to Chinese language Mainland development — however via a market extra tightly linked to home coverage and liquidity cycles.
Regulation, Danger, and Realignment
Chinese language Mainland’s path to abroad capital has essentially modified over the previous decade, formed by deepening US–China tensions and new layers of regulation. Chinese language Mainland firms are actually going through extra stringent necessities to entry US capital markets. Consequently, the variety of new listings from Chinese language Mainland firms on US exchanges has virtually halved from 19 in 1H23 to 11 in 1H25.
The passage of the Holding Overseas Firms Accountable Act (HFCAA)[1] in the USA in 2020 was a landmark, which forces necessary delisting from the US market if a overseas firm fails to adjust to the PCAOB’s inspection of its audit papers.
Chinese language Mainland nationwide safety legal guidelines prohibit the sharing of sure monetary and operational data with overseas entities, nevertheless. As an example, Chinese language Mainland Information Safety Legislation[2] imposes strict controls on cross-border information transfers, which straight collide with US necessities.
The mixed affect of regulatory boundaries, delisting waves, and geopolitical uncertainty has led to a structural realignment in international capital markets. As well as, the growing recognition of personal market capital elevating in the USA additional diminished the attraction for public listings.
World PE funds raised $424.6 billion in 1H2025, already greater than the full in 2024. Thus far, solely a minor portion of delistings of Chinese language Mainland companies have been pushed by PE acquisition in comparison with the pressured delistings. Nevertheless, better flexibility, confidentiality, fewer disclosure necessities, and strategic management render the personal market an rising enticing different.
This shift isn’t non permanent. It’s a structural recalibration of how firms listing, how buyers consider, and the place capital flows. As US–China decoupling deepens, HKEX is positioning itself as the brand new gateway for Chinese language Mainland’s international ambitions.
Buyers should adapt because the investable universe of Chinese language Mainland equities shifts from ADRs to Hong Kong SAR listings, reshaping liquidity, governance, and valuation dynamics.
| Firm | Trade | Delisting Date | Essential Purpose | Voluntary or pressured |
| Luckin Espresso | Meals and Beverage | June 2020 | Fraud Scandal; $864M misplaced by U.S. buyers | Compelled |
| China Telecom, China Cell, China Unicom | Telecom | Jan 2021 | Govt order citing their ties to the Chinese language army | Compelled |
| CNOOC Ltd. | Oil and fuel | Oct 2021 | Nationwide safety considerations | Compelled |
| Didi | Experience-hailing | June 2022 | Information safety considerations | Compelled |
| ChinData | Information Service | Dec 2023 | Strategic acquisition by a PE agency | Voluntary |
Desk: Notable delistings of Chinese language Corps within the US exchanges.
Supply: SEC, NYSE, Nasdaq.
The Gateway Reinvented: HKEX’s Structural Benefit
HKEX’s latest reforms construct on a long-held benefit: proximity and coverage alignment that make it the pure vacation spot for Chinese language Mainland listings.
The Inventory Join was developed and launched by HKEX, Chinese language exchanges, and ChinaClear in 2014 to construct a mutual market entry system between Chinese language Mainland and Hong Kong SAR, permitting Chinese language Mainland buyers to commerce Hong Kong SAR shares by way of native brokers, largely boosting liquidity and valuation potential and sustaining home protection for Hong Kong SAR-listed Chinese language Mainland companies.
These adjustments make HKEX not solely the itemizing venue of alternative for issuers, however an more and more essential conduit for buyers looking for diversified publicity to Chinese language Mainland’s innovation financial system.
For a very long time, Chinese language Mainland companies most well-liked U.S. exchanges for dual-class share buildings that enable them to retain management whereas elevating capital; in 2018, HKEX launched weighted voting rights for modern firms, providing equal flexibility and eliminating regulatory arbitrage.
As well as, HKEX’s sectoral give attention to biotech, tech, and inexperienced vitality companies strategically aligns with the Chinese language Mainland authorities’s initiatives, leaving apart the cultural and geographic proximity to the Chinese language Mainland Collectively, these components, mixed with the latest structural reforms, have remodeled HKEX right into a venue that’s now the de facto alternative for Chinese language Mainland companies looking for worldwide growth.
The New Face of Chinese language IPOs: Classes from CATL
The surge in IPOs on the HKEX on this 12 months’s first half is the end result of the regulatory panorama, structural reform, and geopolitical sentiments — a brand new chapter in how Chinese language Mainland companies entry worldwide capital and develop.
Probably the most outstanding itemizing on this rising HK IPO panorama is CATL. On Could 20, Up to date Amperex Expertise Co. Ltd. (CATL), the Chinese language Mainland battery large, accomplished the biggest IPO globally of the 12 months, elevating $5.2 billion on HKEX. The IPO was oversubscribed, and CATL exercised the overallotment possibility as a result of robust demand. Nearly all of the proceeds had been used for his or her European growth, together with an EUR8.2 billion battery plant in Hungary.
CATL’s A+H itemizing technique paid off. Its shares priced at a premium on the HKEX — a sign of robust worldwide investor confidence. This IPO is a transparent show of the dynamics of the brand new chapter of HKEX IPOs, with a Chinese language Mainland tech large efficiently elevating a big quantity via an A+H itemizing, using the structural reform and sectoral focus benefits of HKEX to gas its worldwide growth.
Together with CATL, HKEX held 4 of the world’s 10 largest IPOs on this 12 months’s first half. The $14 billion of proceeds marked a 723% YoY development, outperforming all different international exchanges. Furthermore, HKEX has 207 lively itemizing candidates within the pipeline for 2H 2025, suggesting robust momentum and market optimism. In 1H 2025, HKEX reported income and different earnings of HKD14.08 billion, a 33% YoY development, and a internet revenue of HKD8.52 billion, a 39% YoY development. As a necessary market liquidity measurement, common every day turnover reached HKD240.2 billion, surging 118% YoY.
Past the Increase: Focus Danger and What Comes Subsequent
But behind the record-breaking IPO surge lies a extra difficult actuality, one which exposes Hong Kong SAR’s rising dependence on the Chinese language Mainland. The entire market cap of HKEX at the moment consists of round 80% from Chinese language Mainland firms. This degree of focus brings important publicity to the Chinese language Mainland’s financial cycles, regulatory shifts, and coverage regimes. Moreover, there may be the growing integration of Chinese language Mainland governance into Hong Kong SAR’s institutional framework.
Furthermore, many IPOs had been priced aggressively, making them susceptible to their post-IPO efficiency. The Hold Seng index rose greater than 20% YTD, however many regard this development as being pushed by short-term liquidity inflows somewhat than sustainable financial fundamentals. The momentum largely relies on continued regulatory assist, investor confidence, and secure macroeconomic circumstances.
For portfolio managers, the takeaway is evident: Hong Kong SAR’s resurgence expands alternative, however heightens correlation threat. Differentiating cyclical restoration from structural realignment will likely be key.
References
Bloomberg New Economic system: High China Economist Says Beijing Simply Needs Respect – Bloomberg
The Way forward for Investing: 2024/25 Version—Overview | Franklin Templeton Institutional
Chinese language Firms Listed on Main U.S. Inventory Exchanges
China battery large CATL is increasing globally: Right here’s why it issues
Hong Kong’s ECM Panorama in H1 2025
Non-public fairness fundraising rises in H1 2025, extra capital hinges on IPO exits | S&P World
[1] Holding Overseas Firms Accountable Act: The HFCAA was enacted on Dec 18, 2020, as Public Legislation 116-222, amending the Sarbanes-Oxley Act of 2002, SEC.gov | Holding Overseas Firms Accountable Act.
[2] Information Safety Legislation of PRC: Enacted on June 10, 2021, mandates a categorized and categorized information safety system on “essential” and “core” information, and triggers authorized legal responsibility for any risk to “nationwide safety,” Information Safety Legislation of the Folks’s Republic of China.
