Hong Kong’s IPO boom is developing a performance problem

BEIJING — Hong Kong may be the best market globally for initial public offerings, but it also suffers from a trend of poor stock performance from those initial public offerings.

The Hong Kong stock exchange ranked first in the world for IPO funds raised last year – beating out the New York Stock Exchange and Nasdaq, which were second and third respectively – According to KPMGnoting that he is strong The momentum in 2025 continued in the first quarter of this year. More than 600 companies They expect to be listed on the Hong Kong stock exchange starting Thursday, according to their website.

However, Hong Kong IPOs generally underperform. Nearly half of the 179 listings since January 2025 traded lower in the past three months, according to Chinese financial data firm Wind Information. This compares with a slight decline in the benchmark Hang Seng index and a more than 10% rise in the FTSE Renaissance Global IPO Index over the same period.

The performance gap is even worse for those on Stock Connect, a program that allows mainland Chinese to invest directly. More than half of the 33 Hong Kong-listed stocks that joined Connect on March 9 more than doubled in price between their IPO and the last trading day before inclusion. Eight companies, including artificial intelligence startup Deepexi, are up more than 300% during this period.

The entire group of eight is down 10% or more since then. Deepexi fell by 51% as of June 3.

Beijing realizes this. State-backed Securities Times on May 29 last to highlight Concerns about sharp rises and subsequent declines in some Hong Kong IPOs.

Gavekal portfolio manager Leonid Mironov noted that many listings in Hong Kong’s H shares are already traded as mainland China’s A shares. He said that after the shares joined the Connect program, capital mostly shifted to cheaper A shares.

Ding Wenjie, global equity investment strategist at China Asset Management Co., said the firm has noticed that some funds in Hong Kong are taking advantage of the inclusion of Connect as a way to generate additional returns.

Goldman Sachs predicted this spring that companies would raise about $60 billion this year in Hong Kong listings; this was almost double the $36 billion achieved in 2025. The investment firm downgraded its Hong Kong H shares in favor of mainland China A shares on Wednesday to gain greater exposure to AI hardware plays.

Lower wages, weaker fundraising and intensifying competition mean “there is unquestionably pressure on parts of China’s financial sector,” Benjamin Cavender, managing director of China Market Research Group, told CNBC. “This is probably focused on short-term performance.”

HKEX said in a statement to CNBC that its stock price performance is affected by a number of factors.

Next tests for the market: Information Atlas TechnologyThe company behind AI model Zhipu is one of the high-profile stocks expected to begin trading in Shanghai via Connect on Monday. MiniMax He will probably join later this summer. Both companies were listed in Hong Kong in January.