CITIC SEC has released a research report stating that the Hong Kong IPO market in 2025 was exceptionally active, characterized by high-quality listings. Building on this foundation, the market demonstrated significant profitability, which in turn fueled strong investor enthusiasm for subscribing to new share offerings. Looking ahead to 2026, with a substantial pipeline of potential listings and relatively assured project quality, the Hong Kong IPO market is expected to maintain its momentum. The report advises that both anchor and cornerstone investors should continue to meticulously select projects based on their own specific advantages and risk appetites. The main viewpoints of CITIC SEC are outlined below.
The Hong Kong IPO market in 2025 was notably vibrant, displaying trends towards larger market capitalizations and a significant increase in the number of A-to-H listings. A total of 116 companies conducted IPOs in Hong Kong during 2025, raising an aggregate of HKD 285.9 billion (excluding listings by introduction), making it the most active year since 2022. The market maintained its recent characteristic focus on the technology, consumer, and pharmaceutical sectors. Furthermore, listings showed a trend towards larger market caps; while IPOs with a market capitalization exceeding HKD 10 billion accounted for approximately 30% from 2020 to 2024, this figure surged to 56% in 2025, suggesting a higher overall quality of listings for the year. Additionally, there were 19 A-to-H listings, representing 16.4% of the total—the highest proportion in the past decade and significantly above historical levels.
The market's profitability effect was pronounced, leading to high investor enthusiasm for new subscriptions, with mainland institutions actively participating in cornerstone investments for Hong Kong IPOs. In 2025, the average and median effective subscription multiples for the institutional placement (placing) tranche were 8.7 times and 4.5 times, respectively. For the public offering (public subscription) tranche, the figures were substantially higher, with an average of 1,654.9 times and a median of 312.9 times. These subscription multiples, for both tranches, reached historically high levels, clearly indicating immense interest from both institutional and retail investors. The first-day breakdown rate for Hong Kong IPOs in 2025 was only 27.6%, the lowest since 2018. From a first-day return perspective, the median first-day return was 9.6%, while the average soared to 36.6%, both marking the highest levels since 2018. Notably, while cornerstone investments in Hong Kong IPOs were traditionally dominated by foreign investors, including overseas sovereign wealth funds, 2025 saw active participation from various mainland investment institutions, such as public funds, insurance capital, and wealth management subsidiaries.
Regarding investment strategy, the key for both anchor and cornerstone investments lies in project selection; the characteristic of lower volatility in A-to-H listings is worth noting. First-day returns for new Hong Kong stock subscriptions and returns from cornerstone investments are strongly correlated with the performance of the secondary market. However, within the same year, returns can vary dramatically between different projects. For instance, the average return for the top 20% of performers has been consistently substantial across years, while the average for the bottom 20% has been persistently negative. Therefore, meticulous project selection is paramount for both anchor and cornerstone investors, with market timing playing a supplementary role. Anchor investing primarily involves gauging market sentiment, whereas cornerstone investing requires in-depth research into individual stocks. Moreover, A-to-H listings exhibit lower volatility in both first-day returns and cornerstone investment returns, for two main reasons: 1) these projects have corresponding A-share stocks that serve as a valuation anchor; and 2) the respective companies typically have a longer operating history, leading to greater certainty regarding their fundamentals.
Outlook for 2026 and Investment Recommendations: The Hong Kong IPO market is expected to remain hot; both anchor and cornerstone investors should carefully select projects based on their own strengths and risk preferences. According to statistics from Choice data, 357 companies are currently in the queue for listing on the Hong Kong Exchange, including 105 A-to-H projects. Given this abundant pipeline and relatively assured project quality, the Hong Kong IPO market is poised to stay active in 2026. For anchor and cornerstone investors, the emphasis should be on selective project picking tailored to their specific advantages. In terms of inherent strengths, investors can focus on selecting projects within sectors they have expertise in or established investment connections with. Regarding risk preference, investors might consider using A-to-H projects as a core holding to build a stable base, while seeking additional returns from other types of listings.
Risk factors include significant adjustments to IPO policies in Hong Kong and mainland China; risks associated with substantial market volatility and unforeseen events; and the disclaimer that past performance is not indicative of future results.
Comments