Large Projects Support HKD 100 Billion Financing As Hong Kong IPO Structural Divergence Intensifies

In the first quarter of 2026, Hong Kong’s IPO market sustained robust activity. Wind data show that, as of March 31, approximately 40 companies completed listings in Hong Kong, representing a year‑on‑year increase of 150.00% and raising about HKD 109.9 billion, up 488.81% year‑on‑year. The market reached the HKD 100 billion fundraising milestone within 79 days, whereas the same fundraising level required nearly half a year in the prior period; in 2023 and 2024, annual IPO fundraising in Hong Kong did not surpass the HKD 100 billion threshold.

The return of large IPOs has been the principal driver of this financing surge. Unlike the prior year when smaller deals dominated, the first quarter of 2026 saw prominent mainland issuers such as Muyuan Foods and Dongpeng Beverage list in Hong Kong, each raising in excess of HKD 10 billion and materially lifting aggregate fundraising. Nevertheless, beneath the headline figures, post‑listing performance has become increasingly bifurcated: of the 40 new listings, 24 have already traded below their issue price, leaving the market oscillating between apparent prosperity and underlying concern.

Issuance pace accelerated markedly in the quarter, with large transactions accounting for much of the increase in aggregate proceeds. Sector composition shifted toward new‑economy and technology names, as semiconductors, software services, robotics and medical technology accounted for a larger share of listings while traditional consumption and manufacturing proportions declined. The number of listed companies in semiconductors, software services and industrial engineering reached eight, seven and seven respectively, with concentrated listings in subsegments such as algorithmic vision and robotics, indicating Hong Kong’s growing capacity to absorb “new quality productivity.”

Sponsorship market share is dominated by Chinese brokerages. CICC International led with 15 sponsored deals, maintaining its leading position in Hong Kong IPO underwriting, while CITIC Securities (Hong Kong) and Huatai Financial Holdings (Hong Kong) each sponsored seven deals. Among foreign banks, Morgan Stanley and UBS Securities led with four deals apiece.

Despite strong primary market activity, secondary market flows have shown pronounced polarization. Excluding Landtour’s introduction listing, 24 of the quarter’s new issues have fallen below their offer price, implying a break‑even rate of about 61.54%, substantially higher than the 27.6% recorded for 2025; ten issuers have declined more than 20% since listing. Performance dispersion is evident: a small number of popular names delivered large gains, while a significant tail of issuers experienced weakness. AI, semiconductor and new‑energy companies generally performed relatively well, with some AI names achieving multiple‑fold gains—Zhipu and MINIMAX‑W rose 595.82% and 207.25% respectively since listing. By contrast, traditional consumer, eldercare and certain industrial companies were more prone to post‑listing weakness. Hongxing Cold Chain and Zhuozheng Medical have fallen 46.59% and 44.39% since listing, while Youleshare and Estun breached their offer prices on debut, falling 43.64% and 16.02% on day one and currently down 37.10% and 11.40% respectively.

Market participants attribute the rising break‑even rate to clearer capital preferences rather than a simple market cooling. Investors appear willing to pay premiums for high‑growth, high‑certainty businesses while showing markedly lower valuation tolerance for traditional sectors with limited growth prospects. Pricing strategy at issuance has also influenced outcomes: several companies adopted aggressive pricing ranges and relied on cornerstone investors during subscription, but subsequent market volatility, underwhelming operational performance or insufficient follow‑through buying led to price declines. Examples include Dongpeng Beverage, Zhaowei Electromechanical, Longqi Technology and OmniVision Group, which listed at discounts to their A‑share valuations yet have since fallen 13.98%, 13.84%, 25.92% and 33.09% from their offer prices respectively. Extreme cases have emerged, such as Tongrentang Medical Care postponing its planned March 30 Hong Kong listing due to weak subscription demand; at the proposed top offer price of HKD 8.30, the post‑issue market capitalization would have been about HKD 3.86 billion, implying a 2024 P/E in excess of 80 times versus peer valuations around 19–20 times.

Taken together, the first quarter displays a pattern of structural prosperity in Hong Kong’s IPO market. Large projects and technology issuances have driven a rapid expansion in fundraising, while rising post‑issue weakness and volatility have acted as a market‑based constraint on issuance quality and pricing. As Cao Gang of Zehao Capital observed, the market is shifting from a focus on whether companies can list to an emphasis on how well they perform after listing; IPOs are increasingly functioning as global value validation rather than merely financing events.

Looking ahead to the second quarter, market participants generally expect continued fundraising activity, though pace and quality will be the critical variables. A pipeline of large projects suggests further upside in aggregate proceeds, yet ongoing issuance expansion may divert existing capital and increase volatility, particularly as numerous newly listed companies approach lock‑up expirations in the second half of 2026. The Hong Kong Exchange is also strengthening intermediary accountability and emphasizing quality in its review process. Current queue data show about 380 companies awaiting Hong Kong listings, including 106 already listed on A‑shares; 204 firms have filed for the first time this year, with A‑share companies accounting for nearly one‑third.

CICC noted that active IPO and refinancing activity in 2025 laid the groundwork for 2026 funding demand. Based on the current listing queue and potential deal sizes, Hong Kong IPO fundraising could rise from last year’s HKD 285.8 billion to roughly HKD 440.0 billion in 2026. The market’s evolving dynamics suggest that future success will depend less on the ability to launch an IPO and more on the quality of issuance and post‑listing performance, with capital markets increasingly “voting with their feet” and accelerating the process of selection.