The Hong Kong stock market achieved a decade-high fundraising total in 2025, reclaiming the top global position, and saw its fundraising amount reach $43 billion in the first five months of 2026, representing a year-on-year increase exceeding 50%. More than half of this fundraising activity was led by the technology sector.
This coincides with a historic wave of technology company listings in the U.S. stock market. A widespread market concern is that these mega-listings could siphon capital away from Asian markets, inevitably impacting Hong Kong.
Against this backdrop, Chen Ge, Co-Head of Global Investment Banking at UBS Securities, recently discussed the latest trends in Hong Kong IPOs and shifts in investor structure. He stated directly that the potential capital diversion from Hong Kong by U.S. super-IPOs might be far less significant than the market fears.
Chen Ge's assessment is based on changes in Hong Kong's investor base. He cited data showing that five years ago, 30% to 40% of funding for Hong Kong IPO deals came from U.S.-backed investors. This year, that proportion has fallen to around 20%, while capital from Europe and the Middle East has risen to 30%-40%.
The shift in funding sources is just the surface. The deeper signal is that Hong Kong's market is undergoing a systemic change in its pricing logic.
The Hang Seng AH Premium Index, which measures the price gap between dual-listed shares, has been declining since February 2024, hitting an eight-year low in February 2026. The Hong Kong share prices of companies like Contemporary Amperex Technology, Montage Technology, and GigaDevice have successively surpassed their A-share prices. Furthermore, the proportion of technology companies in Hong Kong IPOs jumped from 16% in 2025 to 63% currently.
Currently, Chinese assets are becoming a 'wild card' in global investment portfolios. For international investors, the discussion has shifted from 'whether to allocate' to Chinese assets to 'how to allocate' them.
Hong Kong Shares No Longer at a Discount
For over a decade, Hong Kong shares trading at a discount to their A-share counterparts was a consensus in China's capital markets. Chen Ge noted that historically, due to liquidity and investor composition, Hong Kong shares typically traded at a discount.
However, looking at the past year or two, Hong Kong share premiums are no longer isolated cases. Currently, six stocks still show an H-share premium over their A-shares. The Hang Seng AH Premium Index, which once exceeded 161 in February 2024, dropped to around 113 this February and is currently hovering near 120. The discount in the hard tech sector has completely reversed.
Chen Ge believes the key reason is a change in global investors' valuation methodology.
"Global overseas investors don't just compare Chinese companies with each other; they benchmark them globally. If a company is globally competitive and ranks first in certain market segments, global investors are willing to pay a premium," Chen Ge explained. For AI-related targets, this is compounded by the scarcity of listed projects, as the number of available choices is limited.
This shift was concentrated in a series of 'firsts' during the first half of the year. The Qatar Investment Authority (QIA) participated as a cornerstone investor in an 'A+H' project for the first time with Dongpeng Beverage. The Abu Dhabi Investment Authority (ADIA) acted as a cornerstone investor in a Hong Kong IPO for the first time with MiniMax. JPMorgan and Fidelity also served as cornerstone investors in Hong Kong IPOs for the first time this year.
Chen Ge revealed that in Montage Technology's cornerstone list, the largest allocation went to UBS Asset Management, and the second largest to JPMorgan, adding that "they also made the decision in Hong Kong." These cornerstone lineups reflect two things: first, the enthusiasm of overseas long-term and sovereign wealth funds for Hong Kong IPO projects; second, these funds have a certain degree of influence over pricing.
UBS research data shows that global actively managed funds' allocation to Chinese stocks has rebounded from 5% in Q4 2024 to nearly 7% currently. This remains half the level of the 2021 peak of 15%. Even after a rapid half-year recovery, global institutions remain underweight on Chinese assets overall, which Chen Ge views as a source of potential future inflows.
Behind the Pricing Reversal
Once pricing power shifts, corporate behavior follows.
In January, Zhipu AI and MiniMax listed on the Hong Kong Exchange. Within less than five months, both companies subsequently initiated plans for A-share listings.
Chen Ge stated that these companies have healthy and rapidly growing businesses, with global competitiveness and scarcity supporting strong valuations and post-listing performance.
Chen Ge observes that this trend has longer-term structural support. He noted that the pace of technological advancement and iteration among Chinese companies is very fast. "Many companies' businesses have already started expanding overseas, 'China for Global,' which will inevitably bring growth in business profits." This implies a continuous pipeline of hard tech companies entering Hong Kong's globally-priced channel.
The landscape of financing instruments is also being rewritten. So far this year, the fundraising scale of Hong Kong convertible bonds has unusually surpassed that of traditional share placements and secondary offerings. At the end of April, China Hongqiao issued a RMB 10.2 billion zero-coupon convertible bond, the largest RMB-linked convertible bond ever.
Investors in these instruments value not just the bond's coupon yield, but also the embedded option value of the product, which becomes more valuable over a longer timeframe.
The investor base for convertible bonds is also changing. Chen Ge mentioned that previously, 70-80% came from Europe-based specialized convertible bond investors. "Now Europe accounts for half, with other regions making up the other half." Institutions and insurance funds that previously focused more on equity investments are also entering this space.
As financing tools expand, Hong Kong is transforming from a fundraising channel that historically offered a discount relative to A-shares into a platform for the global pricing of Chinese tech assets.
Not Yet at Halftime
Returning to the initial question: with a cluster of U.S. super-IPOs expected in the second half of the year, what happens to Hong Kong?
Chen Ge's response was clear: "Good projects attract good capital, and good capital also fosters good projects." He stated that U.S. capital currently constitutes about 20% of Hong Kong IPO funding, meaning "80% of the capital comes from Europe, the Middle East, and local Asian funds. These institutions have different investment mandates; it's not that their entire asset allocation proportions change in the short term because of these [U.S.] projects."
In Chen Ge's view, "Hong Kong has always been an open market. When good projects come, capital will follow."
Chen Ge further pointed out that this year, much capital previously invested in the Middle East and Europe is shifting towards Asia, particularly the Chinese market, influenced by multiple factors. Simultaneously, Chinese companies' technological iterations and overseas expansion in areas like AI infrastructure and semiconductor supply chains are creating continuous investment themes. "These investment themes and strong fundamentals will also attract global investors' capital to continuously focus on these investment opportunities."
UBS forecasts total Hong Kong IPO fundraising for 2026 to reach $45-$50 billion and expects the Hang Seng Index to potentially break through the 30,000-point level within the year.
Chen Ge revealed that based on the composition of projects in UBS's pipeline, for at least the next six months to a year, "whether in terms of market activity or sector distribution, this trend will continue."
Chen Ge's confidence in Hong Kong's second half has more specific underpinnings.
From the capital side, although global institutions' allocation to Chinese assets has rebounded noticeably, it remains far below historical highs, which "is also a source of potential future inflows."
Looking at southbound capital flows, since Q4 2024, most months have maintained a clear net inflow trend. Apart from a brief slowdown in March due to geopolitical factors, the figures for April and May this year remain at historically high levels.
Furthermore, Hong Kong's trading turnover has consistently hit new historical highs this year, with secondary market liquidity providing a foundation for active primary market issuance.
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