The year 2024 marks a pivotal moment for Hong Kong's IPO landscape, signaling a resurgence as the market rebounds strongly to reclaim its position as the fourth-largest IPO venue globallyThe Hang Seng Index has witnessed an impressive increase of 17.67% over the year, breaking a rare four-year streak of declines from 2020 to 2023.
According to Wind, a prominent financial data provider, 2024 has seen 70 companies listed on the Hong Kong Stock Exchange, raising a total of HKD 87.6 billion, a remarkable 87.6% increase compared to the previous year.

Globally, the rankings for IPO capital raised indicate a significant shift

Deloitte reports that the National Stock Exchange of India catapulted to the top spot in 2024, driven by the IPO of Hyundai Motor Company's Indian subsidiary, which successfully secured USD 3.3 billion, making it the third-largest IPO worldwideThis resurgence is further aided by the rising valuations and activity levels in the Indian stock market.

Other strong contenders like the NASDAQ and the New York Stock Exchange followed in second and third place, respectively, while the Shanghai and Shenzhen stock exchanges, which led the new listings in 2023, slipped to fifth and sixth.

What has driven Hong Kong's IPO fundraising back into the global top four, and can this momentum continue into the future?

Concentration of Major IPOs in Hong Kong

The heating up of the Hong Kong IPO market in 2024 can be largely attributed to several major new listings

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Over the year, the Hong Kong market welcomed 14 IPOs that raised more than HKD 1 billion eachAmong these, four alone raised over HKD 5 billion, and one breaking the threshold of HKD 10 billion.

Reflecting on 2023, only one company, Zhenjiu Lidong, managed to surpass the HKD 5 billion mark.
The blockbuster IPO of Midea Group in Hong Kong has undeniably acted as a "shot in the arm." On September 17, 2024, Midea Group officially listed, marking the largest IPO in the Hong Kong market in nearly three yearsIt issued 566 million shares at a price of HKD 54.8 each, raising a total of HKD 35.6 billion, thus dominating the IPO market with over 40% of the total fundraising.

The timing was perfect as Midea's listing coincided with the start of a new bull market in Hong Kong

Between September 11 and December 31, the Hang Seng Index grew by 17.64%; from September 11 to October 7, the period leading up to Midea's IPO, the index surged 35.47%. Midea's stock price also saw a notable increase post-IPO, climbing 37.86% by year-end.

Following Midea Group's public debut, several other significant IPOs such as Horizon Robotics, SF Holdings, and China Resources Beverage also made their entrances on the Hong Kong market, raising HKD 6.087 billion, HKD 5.831 billion, and HKD 5.774 billion respectivelyThese contributions played a crucial role in helping the Hong Kong IPO market reclaim its fourth spot globally.

Notably, Horizon Robotics, a dual-class share company, raised HKD 6.087 billion, becoming the largest tech IPO in 2024. The company had planned its listing for three years, navigating issues related to its share structure, regulatory requirements, and changes in the financing environment before settling on Hong Kong as its final destination.

Among the notable IPOs, SF Holdings raised HKD 5.831 billion, making it the third-largest in Hong Kong

Similar to Midea Group, it also pursued a dual listing in both A-share and H-share markets.
What drives SF Holdings to seek a secondary listing in Hong Kong after having already established a presence in the A-share market?

“Much like Midea Group, SF Holdings' dual listing is a critical component of its globalization strategyIt aims to facilitate capital operations and enhance its overseas market penetration, representing a significant signal of SF's acceleration towards international expansionAdditionally, the lower fundraising costs associated with a Hong Kong listing can aid SF in maintaining its financial health while expanding its overseas footprint,”stated an industry analyst.
Chairman Wang Wei of SF Holdings expressed at the IPO ceremony that the Hong Kong listing carries significant importance for the company, as it allows SF to leverage the Hong Kong platform to better develop its international markets.

The fourth-largest fundraising, China Resources Beverage, is part of a conglomerate with 18 listed companies under its umbrella

Apart from China Resources Beverage, eight companies are listed in Hong Kong while nine are on the A-share marketIt's interesting to note that the IPO of China Resources Beverage included nine cornerstone investors, including UBS, China Travel, China Post Insurance, and Oaktree, among other renowned investment firms.

The total subscription from these nine cornerstone investors accounted for approximately 1.66 billion shares of the issue, constituting 47.72% of China Resources Beverage’s global share offeringSuch a robust lineup of cornerstone investors instilled confidence in the market, leading to an impressive 15% surge in China Resources Beverage’s stock price on its debut.

Policy Support for the Resurgence of Hong Kong IPOs

In 2024, the policy environment has significantly bolstered the Hong Kong market's positive outlook

In April, the China Securities Regulatory Commission released five measures to enhance cooperation with the Hong Kong capital market, including support for domestic industry leaders to list in Hong Kong, propelling a wave of secondary listings by A-share companies.

According to Frost & Sullivan, there are currently 145 H-shares, with a total market capitalization exceeding HKD 20 trillion, where the Hong Kong portion is valued at HKD 5.8 trillion.

Since September 2024, SF Holdings, Longpan Technology, and Midea Group, all A-share companies, have successfully listed on the Hong Kong stock exchange, collectively raising over HKD 42 billion.
The Hong Kong Stock Exchange has also been preparing to welcome A-share leaders by implementing reforms in listing mechanisms and stock liquidity, leading to increased market activity and demonstrating continuous improvement.

On December 19, 2024, the Hong Kong Stock Exchange’s subsidiary, the Stock Exchange of Hong Kong, sought market opinions on suggestions to optimize IPO pricing processes and regulations in the public market, aiming to create an attractive and competitive listing mechanism for current and prospective issuers.

The exchange's listing department reiterated its commitment to solidifying Hong Kong’s status as a leading fundraising center globally, ensuring robust and competitive listing frameworks and regulations

It is keen to enhance the pricing and distribution mechanisms of IPOs, supporting quality companies worldwide to list and thrive in Hong Kong’s capital market.

Streamlining the new IPO application process and introducing measures for optimizing cooperation with the Hong Kong capital market will encourage more A-share issuers and domestic leading enterprises to consider listing in Hong Kong.

This presents Hong Kong with tremendous advantages and opportunitiesNotably, as of now, only about one-third of the top 500 A-share companies are listed in Hong Kong, creating significant potential for the Hong Kong market.

Analysts from Deloitte suggest that the emergence of a new president in the US may introduce greater geopolitical uncertainties, compelling more mainland firms and U.S.-listed Chinese companies to seek secondary listings in Hong Kong, given the latter's reputation as a prime offshore listings hub for Chinese enterprises.

Moreover, with market expectations for potential interest rate cuts in the US and mainland actions aimed at stimulating economic growth, these factors are expected to revitalize Hong Kong's IPO market as we approach 2025.

The Hong Kong Stock Exchange has also launched a series of new measures, including lowering listing thresholds for specialized technology companies and maintaining trading even during inclement weather.

For instance, the implementation of Chapter 18C of the listing rules has provided new opportunities for specialized tech companies, attracting firms like Black Sesame Intelligence, Jingtai Technology, and Yuejiang Technology to successfully enter the Hong Kong market

The GEM board has also seen positive developments with three firms listing post-reform.

As the Hong Kong IPO market continues to improve and investor confidence grows, the city's allure as a listing destination is increasingly recognized.

The China Securities Regulatory Commission's encouragement for mainland leading companies to consider listings in Hong Kong, alongside moderately relaxed monetary policies in Mainland China, will further stimulate the trend of IPOs.

Moreover, the inclusion of more Middle Eastern stock exchanges in the Hong Kong Stock Exchange's recognized list of securities markets is anticipated to attract select companies from the region for secondary listings in Hong Kong.

Experts predict that 2025 will remain a year of significant company listings in Hong Kong.

Recently, PwC analysts projected that if Hong Kong's capital market maintains stability, the anticipated influx of major A-share companies will lead to approximately 70-80 new listings in 2025, raising an estimated HKD 130-160 billion, which would potentially restore Hong Kong's global ranking to the top three.