Hong Kong’s IPO Boom Hides a Deepening Performance Problem

Hong Kong is leading the world in IPO fundraising, but CNBC reported Sunday that a widening gap between listing-day hype and subsequent trading is undermining confidence in the market’s durability.

Hong Kong Tops the Rankings but Stocks Stumble

According to KPMG data, the Hong Kong exchange raised more IPO capital last year than any other venue globally. The New York Stock Exchange and Nasdaq ranked second and third respectively. That momentum extended into the first quarter of 2026, with more than 600 companies currently queued to list.

Despite those headline numbers, Hong Kong IPO performance is deteriorating. Wind Information, a Chinese financial data provider, tracked 179 listings since January 2025. Roughly half traded lower over the trailing three-month window. That compares poorly with modest declines in the Hang Seng benchmark and gains exceeding 10% in the FTSE Renaissance Global IPO Index over the same stretch.

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The Stock Connect Effect

The underperformance is most pronounced among stocks added to the Stock Connect program, which opens Hong Kong-listed shares to direct investment from mainland Chinese buyers.

Of 33 stocks admitted to Connect in early March, more than half had already doubled from their IPO price by the time they entered the program. Eight surged beyond 300% before inclusion. All eight subsequently dropped at least 10%. AI startup Deepexi fell 51% by early June.

Leonid Mironov, portfolio manager at Gavekal, attributed the pattern to capital rotation. Mainland investors exit Hong Kong H shares once they join Connect, shifting back to cheaper equivalent A shares traded onshore. Analysts at China Asset Management noted that some funds appear to be deliberately timing Connect entry as an exit ramp.

Also Read: Goldman Sachs Cuts H Shares in Favor of A-Share AI Hardware Plays

Background: A Market Under Pressure

Goldman Sachs projected earlier this spring that Hong Kong listings would raise approximately $60 billion in 2026, nearly double last year’s $36 billion total. Yet the same bank downgraded H shares this week, preferring onshore A shares for AI hardware exposure.

Benjamin Cavender, managing director at China Market Research Group, told CNBC that compressed fees and rising competition have squeezed parts of China’s financial sector. That pressure, he argued, has pushed some participants toward short-term performance strategies over sustained value creation.

State-backed Securities Times flagged similar concerns in late May. HKEX acknowledged to CNBC that share price moves reflect multiple variables without addressing the post-listing trend directly.

The next readings will come soon. AI firm Knowledge Atlas Technology is set to begin Shanghai trading via Connect on Monday, with MiniMax expected to follow later this summer.

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