Hong Kong’s IPO Market Gets Boost From PRC Firms

Executive Summary:

• Hong Kong’s IPO market is on track for its strongest year since 2021, raising $2.3 billion in the first quarter of 2025—driven entirely by PRC-based companies. Consumer brands like Mixue and Guming led the listings, benefiting from Beijing’s stimulus measures and public enthusiasm for AI innovations like DeepSeek.
• Upcoming listings are expected from sectors prioritized by President Xi Jinping, including biotech, AI, EVs, and logistics. High-profile companies including Insilico Medicine, Avatr Technology, and Lens Technology are preparing for Hong Kong IPOs, further reinforcing the city’s role as China’s offshore capital hub.
• Despite strong momentum, U.S.-PRC trade tensions and PRC’s internal economic challenges—such as property sector instability and weak consumption—threaten long-term outlooks. Still, renewed U.S. delisting threats may drive more PRC firms to pivot toward Hong Kong, potentially accelerating its resurgence as a global listing destination.

Hong Kong’s market for initial public offerings (IPOs) is poised for its best year since 2021. After a strong first quarter, the market is continuing its hot streak. Bubble tea maker Auntea Jenny (Shanghai) Industrial raised HK$273 million ($35 million) in its market debut and began trading on the Hong Kong Stock Exchange on May 8 with a listing price at the top of its range, with the stock jumped 40 percent on its first day of trading (STCN, May 8). The previous day, Breton Technology, a maker of electric dump trucks, raised HK $148 million ($19 million) (Sina, May 7).

The emergence of the artificial intelligence (AI) model DeepSeek and signals that the PRC government is more willing to support consumption and adopt a more pro-business stance than in recent years have contributed to these gains. In the medium term, however, U.S. President Donald Trump’s sweeping tariffs, Beijing’s retaliatory actions, and structural weaknesses in the economy heighten the risk of a broad economic downturn. From Beijing’s perspective, preserving Hong Kong’s role in its broader economic strategy will be key to navigating through the current uncertainty. The financial data from so far in 2025 suggests that it is succeeding.

Mainland Firms Dominate First Quarter Listings

In the first quarter of 2025, Hong Kong’s IPO market raised $2.3 billion as 15 companies went public on its main bourse (South China Morning Post, March 31). “HKEX had a strong start to the year, with Q1 2025 being the Group’s best quarterly results on record,” chief executive Bonnie Chan said in a report on the January-March period (HKEX, April 30). Sentiment has been buoyed by the PRC’s recent stimulus measures and excitement about technology linked to DeepSeek’s latest AI models. The quarterly performance was also the strongest since the second quarter of 2021 and saw a nearly fourfold increase in proceeds over the $613 million raised during the same period in 2024. Average deal size reached HK$1.2 billion ($155 million)—up 195 percent year on year (KPMG, April 1). The companies that listed all came from a variety of industries, from financial services to healthcare to consumer goods.

All 10 of the largest IPOs were mainland PRC firms. This is unsurprising given Hong Kong’s increasing dependence on the PRC mainland. At an investment forum in November 2024, PRC Vice Premier He Lifeng (何立峰) reaffirmed Beijing’s intention to continue supporting the city as an international financial center. Li Yunze (李云泽), minister of the PRC’s National Financial Regulatory Administration (NFRA; 国家金融监督管理局), echoed that message. He predicted that, with strong policy backing, Hong Kong’s international financial center “will radiate lasting vitality and create new glories” (焕发历久弥新的生命力，再创辉煌). Li noted that roughly 80 percent of PRC businesses that have listed offshore have gone public in Hong Kong, adding that the city’s fortunes “have always been closely linked to those of the motherland” (香港的命运从来都与祖国紧密相连) (National Financial Regulatory Administration, November 19, 2024).

Hong Kong also remains integral to the PRC’s economic statecraft. Its liquid capital markets and comprehensive, globally connected financial infrastructure provide enormous benefits to the PRC’s comparatively closed system. The special autonomous region (SAR) of the PRC boasts the world’s preeminent offshore renminbi market (China Brief, October 20, 2023). It is also the PRC mainland’s largest source of realized foreign direct investment, accounting for nearly 60 percent of the national total at the end of 2023. In Guangdong Province, where most Hong Kong investment in the mainland is concentrated, direct investment from the city reached over renminbi (RMB) 114 billion ($160 billion) in 2023 (Trade and Industry Department, HKSAR Government, February).

The consumer markets segment led the Hong Kong IPO market both in terms of funds raised and total deals closed in the last quarter. A standout trend was the clustering of large beverage listings: bubble tea firm chain Guming (古茗) raised $232 million in February after setting the price of its shares at the top of an indicated range, followed by Mixue Ice Cream and Tea (蜜雪冰城) raising $444 million in March (Hong Kong Economic Times, February 13; Sina, March 3). Both companies have prospered. Mixue dominates the low-cost fresh beverage market, with the average cost for its drinks at just RMB 6 (less than $1). It has high profit margins thanks to its ability to efficiently build economies of scale and keep raw material costs low (STCN, March 4). Guming targets smaller cities and townships, a relatively new market in which growth is currently outpacing higher-tier cities and municipalities. By the end of 2023, the brand ranked second nationwide for fresh bubble tea in terms of total sales and number of stores (The Japan Times, February 12). Both companies’ shares have performed well since their respective listings: Mixue’s has risen 70 percent and Guming’s 57 percent (Yahoo Finance, accessed April 22).

Another sizable first quarter listing was Shanghai-based toymaker Bloks Group (布鲁可), which raised $215 million in January with demand from individual investors particularly strong (Sina, January 10). Unlike many PRC toymakers that depend on exports, Bloks targets the vast domestic market with low-priced licensed toys and collectibles. It has managed rapid top-line growth despite a sluggish economy: revenue surged 156 percent in 2024 to RMB 2.2 billion ($300 million). However, unlike Mixue and Guming, it is yet to turn a profit, posting a RMB 400 million ($55 million) loss in 2024 (Dahe Fortune Cube, March 26).

Besides the consumer segment, industrial offerings—including the mining and precious metals sectors—also drew investor interest. Chifeng Jilong Gold Mining Co. (赤峰黄金) raised HK$2.8 billion ($360 million) and Nanshan Aluminum (南山铝业) raised HK$2.3 billion ($300 million) (KPMG, April 1).

Burgeoning Deal Pipeline in Strategic Sectors

Several weeks into the second quarter of 2025, Hong Kong’s IPO pipeline continues to look promising. Companies in more strategic sectors favored by PRC President Xi Jinping are likely to list in the coming months, including biotechnology and AI.

In March, the Chinese Communist Party’s (CCP) theory journal Qiushi republished a speech Xi delivered in June 2024 at a national technology conference (Xinhua, June 24, 2024; Qiushi, March 31). [1] The speech highlighted both biotechnology and AI as integral to the PRC’s goal of becoming a scientific and technological powerhouse. As he stated at the outset of the speech, “When science and technology prosper, the nation prospers; when science and technology are strong, the country is strong” (科技兴则民族兴，科技强则国家强), adding that the PRC should be “world-leading” (居于世界前列) and “make leaps in economic strength, national defense, and comprehensive national power” (经济实力、国防实力、综合国力整体跃升).

Chongqing-based electric vehicle maker Avatr Technology (阿维塔科技) may list in the second half of 2025. Backed by state-owned giant Changan Automobile (长安汽车), which has a 41 percent stake in the company, and Huawei, the firm reportedly plans to raise up to $1 billion. Proceeds would fund new models and fuel the firm’s overseas expansion (BossMind, March 12).

Apple iPhone glass supplier Lens Technology (蓝思科技) announced in March that its board had approved a plan to list in Hong Kong. The Shenzhen-based company also counts Samsung, Huawei, Xiaomi, Tesla, BYD, and Meta Platforms among its clients. In its filing, the company said its Hong Kong listing would “advance the company’s global strategic layout, enhance its international brand image and boost overall competitiveness” (進一步推進公司國際化戰略，提升公司國際品牌形象，增強公司核心競爭力，及提升公司經營管理水平). About 68 percent of Lens Technology’s sales were from outside the PRC in 2023 (HKEX, March 13).

China Southern Logistics (南航货运), the cargo arm of China Southern Airlines (中国南方航空), is also considering a Hong Kong IPO after withdrawing an application to list in Shanghai in February. The deal is expected to raise hundreds of millions of dollars (Hong Kong Economic Times, April 16).

Even a U.S.-based firm, Insilico Medicine, which has facilities in Hong Kong, is weighing a Hong Kong listing. The firm’s leadership says that it is yet to decide on a timeline, but the AI-driven drug-discovery firm recently raised capital at a valuation above $1 billion, underscoring “growing interest in the potential use of AI to discover groundbreaking new drugs,” according to Bloomberg (Bloomberg, March 13). Insilico earns revenue from licensing assets to clients such as PRC’s Fosun Pharma (复星药业) and Exelixis Inc.

Part of the growing investor interest has been catalyzed by the arrival in January of DeepSeek’s open-source generative AI model, R1, which has energized the technology sector (China Brief, February 11, March 19, March 28). Rao Yi (饶毅), a prominent scientist who leads the IDG/McGovern Institute for Brain Research at Peking University, recently described DeepSeek as the biggest shock to come out of China for 185 years. This number is an allusion to the beginning of the so-called “century of humiliation” (百年国耻) that ended in 1945—prior to the founding of the PRC—but which nevertheless figures prominently in CCP discourse decrying the West’s technological hegemony (SCMP, February 7). Despite these promising signs, it remains to be seen how long this moderate spike in optimism lasts.

Strong Headwinds

Hong Kong’s IPO market may look upbeat so far in 2025, but two interrelated risks could curb deal flow. First is the rapidly worsening bilateral relationship with the United States, following President Donald Trump’s hiking of tariffs against the PRC, which has been met with retaliatory measures from Beijing. Second are structural weaknesses in the PRC economy, which include lingering property sector fallout, chronic overinvestment, and tepid domestic consumption, all of which are exacerbated by regulatory uncertainty. It is unclear whether the Trump administration will end up lowering tariffs to a level that will meaningfully change PRC exports’ access to the U.S. market, or if Beijing will agree to make any concessions in any eventual deal.

Beijing has repeatedly condemned the U.S. for “tariff barriers and trade bullying” (关税壁垒和贸易霸凌) but officials publicly exude confidence in their approach. In the long term, according to Deputy Director of the National Bureau of Statistics Sheng Laiyun (盛来运), the tariffs “will not change the general trend of China’s continued long-term economic improvement” (改变不了中国经济持续长期向好的大势) (Xinhua, April 16).

Economists outside the PRC are unconvinced. They argue that the new tariffs could slow the PRC’s economy this year, something that has been reflected in institutions lowering their growth forecasts for the PRC (Oxford Economics, April 11). Goldman Sachs said in an April report that it expects Beijing to further intensify policy easing, projecting 60 basis points of policy rate cuts compared to 40 basis points previously. However, the report added, “even these significant easing measures are unlikely to fully offset the negative effects of the tariffs” (The Wall Street Journal, April 11; Goldman Sachs, April 17). Similarly, absent meaningful stimulus measures from the central government in Beijing, consumption is unlikely to budge in the near future. Consumer sentiment remains close to record lows, according to OECD data (Trading Economics, accessed April 23).

The deteriorating business environment in Hong Kong is another headwind that Beijing has so far been unable to rectify. Xi Jinping met with international business leaders at the end of March and gave a speech thanking them for supporting the PRC’s development. Xinhua coverage led with the headline “Foreign business leaders reaffirm China as oasis of certainty” (FMPRC, March 28; People’s Daily, March 29; Xinhua, March 31). However, some American firms are nonetheless reducing their manufacturing dependency on the PRC. In a 2024 survey by the American Chamber of Commerce in China (AmCham China), about 30 percent of respondents said that they were considering or had begun manufacturing or sourcing diversification, exceeding the prior record of 24 percent in 2022 (AmCham China, January 2025).

Conclusion

Trade tensions and structural weakness in the PRC economy are likely to impact Hong Kong’s IPO market going forward. For now, however, the Hong Kong Stock Exchange’s strong year is continuing. The SAR remains the preferred offshore venue for PRC companies seeking international capital, and Beijing has heightened the city’s importance as the country’s primary offshore financial hub, allowing it to be far more open from a financial perspective than any mainland PRC city.

Hong Kong could further benefit if the U.S. revives its long-standing threat to delist PRC companies from U.S. exchanges if they continue to refuse U.S. auditing oversight. When asked about this possibility in a recent television interview, U.S. Treasury Secretary Scott Bessent said, “everything’s on the table” (Reuters, April 17). Roughly 286 PRC companies are listed on the New York Stock Exchange, Nasdaq, and NYSE American, with a combined market capitalization of $1.1 trillion. During the first Trump administration, these companies faced the threat of delisting following the passage of the Holding Foreign Companies Accountable Act (HFCAA) in December 2020. As a result, PRC firms including Alibaba, JD.com, and NetEase all chose either a dual-primary listing or secondary listing in Hong Kong. Some industry insiders in fear similar threats from the second Trump administration. “History is likely to repeat itself,” predicts Tom Chan Pak-lam, honorary president of Hong Kong’s Institute of Securities Dealers (SCMP, April 11). Much remains uncertain as preliminary trade talks begin between Washington and Beijing, but Hong Kong’s role as a critical financial center as part of the latter’s economic strategy looks set to continue.

Notes

[1] The full title of the conference was the Nationwide S&T Conference, National Science and Technology Awards Conference, and the Conference of Academicians of the Chinese Academy of Sciences and the Chinese Academy of Engineering (全国科技大会、国家科学技术奖励大会、两院院士大会).