Global funds fuel Hong Kong IPO rebound as investors rebalance China portfolios

Hong Kong initial public offerings (IPOs) are attracting strong international demand as global funds rebuild their exposure to China after years of underinvestment, according to Bonnie Chan Yiting, CEO of Hong Kong Exchanges and Clearing. The Hong Kong stock exchange was seeing “very good momentum on both the supply and demand sides” for IPOs, Chan told a panel discussion at the HSBC Global Investment Summit on Wednesday. On the “cornerstone front”, last year saw “a very strong pickup by international investors” with orders from North America, Europe and the rest of Asia, she said. “The world has realised that they are underinvested in China.” Companies tapping international capital through Hong Kong this year have also drawn substantial overseas interest. These included Muyuan Foods, China’s largest pig breeder, which raised HK$10.7 billion (US$1.36 billion), with cornerstone investors such as Thailand’s Charoen Pokphand Foods and Singapore’s Wilmar International accounting for about half of the deal. Biren Technology, mainland China’s first graphics processing unit developer to list in the city, raised HK$5.58 billion, backed by cornerstone investors including UBS, Eastspring Investments and Lion Global Investors. In a separate blog post published on Wednesday, Chan described Hong Kong’s markets as “building bridges and connecting Asia’s capital markets”. She said the city was uniquely placed to “connect international capital with opportunities in mainland China and across Asia”. A memorandum of understanding with Bursa Malaysia signed in March builds on ongoing collaboration with Southeast Asian exchanges, including arrangements with the Stock Exchange of Thailand, Indonesia Stock Exchange and Singapore Exchange, Chan said. “For the growing pool of high-quality companies in both Malaysia and Southeast Asia more widely, international expansion may be the next logical step in their growth story,” she said. Artificial intelligence, robotics and energy storage account for most of the record-high IPO pipeline – with more than 520 hopefuls – as China’s economy continued to generate new growth, according to Chan. The pipeline was also becoming more diversified, with more than 10 international companies lined up to raise funds in Hong Kong this year, she said. Hong Kong’s current ranking as the world’s top IPO venue represented an “impressive rebound” given today’s geopolitical uncertainty, said Chan, adding that many governments also wanted to “make sure that their local industries are self-sufficient and self-reliant”, so keeping listings at home mattered more. A total of 37 companies raised about US$13.26 billion on the Hong Kong stock exchange’s main board in the first quarter, up 453 per cent year on year, according to LSEG Data and Analytics. During the same panel discussion, London Stock Exchange CEO Julia Hoggett said the exchange was pursuing a balance between innovation and investor protection. “In many regards, tokenisation is incredibly valuable for our markets, but we should build it on the basis of the immutable principles of how our capital markets work,” she said. The London bourse was already using tokenisation for private assets and was building out blockchain settlement and custody infrastructure, she added. However, she warned that pushing everything fully “on‑chain” would “grind” a modern stock exchange to a halt given the nanosecond speeds at which trading systems operated. As markets move to distributed ledger technology and tokenisation, “there are two principles that all countries should want, which is actually sovereign control of monetary policy and sovereign control of the securities space”, Hoggett said.