Hong Kong stock "pricing power" changes hands? Wall Street returns, a revolution in the Hong Kong stock market investment banking landscape.

In 2026, the Hong Kong stock market is experiencing a perplexing contrast. The first half of the year saw a 92% increase in IPO fundraising compared to the previous year, with the primary market being hot; meanwhile, in March, the Hang Seng Tech Index plummeted by 9.5% in a single month and the short-selling ratio in May reached a historical high of 28.91%, with foreign capital continuously flowing out and the secondary market bleeding persistently. Why is there both prosperity and bleeding in the same market? To understand this paradox, one must look at an underlying variable that is often overlooked by most investors - the quiet change of power in the pricing rights of investment banks. In 2026, a special enforcement action called "FUSE Fusion" initiated by the Hong Kong Securities and Futures Commission broke the dominance of Chinese investment banks from 2023 to 2025, and foreign capital is quietly regaining the pricing power in the Hong Kong stock market. However, this has evolved into a subtle situation where foreign capital "occupies underwriting positions and withdraws funds," directly affecting all investors holding Hong Kong tech stocks. Part 01: A major reshuffle in investment bank seats In 2025, CITIC SEC topped the Hong Kong investment bank rankings with a total underwriting scale of over 90 billion Hong Kong dollars, seemingly solidifying the dominance of Chinese institutions. However, everything changed abruptly in March of 2026. The Hong Kong Securities and Futures Commission, in collaboration with the Independent Commission Against Corruption, launched a special enforcement action under the code name "FUSE Fusion," targeting cross-border gray channels and localized trading models of Chinese institutions, with CITIC SEC being one of the entities under investigation. At the same time, No Limits Capital, which focuses on hard tech tracks and supports financing for several sanctioned companies, was also implicated, casting a shadow over the prospects of related projects. Under the regulatory thunder of the Hong Kong Securities and Futures Commission, CITIC SEC's IPO sponsorship scale in the first half of 2026 slipped to fourth in the market, and underwriting for fundraising fell to ninth. The power vacuum was then filled by foreign capital. According to Hong Kong Exchange data, the top three underwriters for fundraising in the first half were: Merrill Lynch with 12.546 billion Hong Kong dollars, China International Capital Corporation with 11.647 billion Hong Kong dollars, and Morgan Stanley with 11.358 billion Hong Kong dollars. Three of the four global coordinators for Contemporary Amperex Technology's offering were held by foreign capital. The China Financial Capital Research Institute's assessment hit the nail on the head: "The 'Fusion' action has hit the pause button on Chinese investment banks' businesses, giving foreign capital a key opportunity to completely get rid of their marginalized role in the past few years." Part 02: The liquidity trap of foreign capital "occupying positions without paying" Why is the battle for pricing rights so crucial? For tech companies, refinancing is more important than IPOs. Tech innovation inherently involves high investment, long cycles, and high risks, and the ability to refinance continuously directly determines whether a company can maintain sufficient ammunition in the competition. Whoever controls the pricing logic of refinancing holds the lifeline to the growth of tech companies. The return of foreign capital provides international endorsements and higher market recognition to companies - something that issuers are happy to see. However, a dangerous crack is forming. Under the dual pressures of high yields on US treasuries and the strong pull of AI targets in the US stock market, the fundraising scale on the NASDAQ in the first half of 2026 has reached $129.3 billion, a year-on-year increase of over 500%; while at the same time, the refinancing scale on the Hong Kong stock market has shrunk by 34.38%. Global capital is migrating to the US stock market at an observable speed. The role played by foreign capital investment banks in the Hong Kong stock market has thus undergone a subtle and dangerous split - they aggressively seek underwriting business but continue to withdraw long-term funds. The contradiction between business positioning and fund withdrawal is sparking chain reactions on the market: the Hang Seng Index plunged by 6.92% in March, and the drop in the Hang Seng Tech Index expanded to 9.5%; the sentiment for short selling continued to heat up from May to June, with the short selling amount reaching 57.52 billion Hong Kong dollars on the closing day of June 30, staying above the 20.5% caution line, and tech stocks experiencing a K-shaped differentiation trend. Every grain of dust falling on a company is like a mountain. When foreign capital investment banks control the pricing rights of offerings, a unavoidable issue arises: in order to quickly complete allocations and lock in underwriting revenue, foreign capital tends to attract buyers with significant discounts in pricing, but these large discounts dilute the equity of existing shareholders of the listed companies directly, and may even drag down stock price performance. The data supports this concern. In the first half of 2026, nearly 30 refinancing projects that were exclusively held by foreign capital (i.e., without any Chinese investment banks participating or holding names) all experienced varying degrees of decline in stock prices after allocations, with REFIRE plummeting by about sixty percent and KB LAMINATES dropping by about forty percent. A structural dilemma led by foreign capital in pricing but not supporting the market with capital is deeply affecting every investor holding tech stocks in the Hong Kong market. Part 03: What anchor points are left for investors to judge? Looking ahead with the historical telescope, the landing of FUSE regulations, the hierarchy of foreign capital dominance and Chinese business contraction is likely to persist in the future. With the reshaping of this landscape, investors need to recalibrate their own cognitive coordinates. When foreign capital returns to the lead position as global coordinators, the valuation reference system for Hong Kong tech stocks will lean more towards the international market, rather than being solely driven by southbound capital sentiment. This means that traditional strategies for Hong Kong stocks need to incorporate more global perspectives. As the split between "business positioning and fund withdrawal" continues to exist, the abnormal increase in short selling ratios often serves as an earlier warning of risks than the index itself. Tracking the flow of foreign capital and the dynamics of short selling are crucial tools for capturing phase tops and bottoms. It is worth noting that the continued explosion in the AI hardware industry is currently the most noteworthy hedge variable and may also become a "ballast" for Hong Kong stock financing. If the AI hardware boom continues, the ecosystem of Hong Kong stock financing will receive strong support, and Chinese investment banks will also have a period of rebound opportunity. In conclusion, the Hong Kong market is undergoing a profound transformation shaped by regulation and global liquidity. The battle for pricing rights is at the core of this transformation. The story of Hong Kong in 2026 is not just a report card of the prosperity of IPOs. It is also a power struggle over who can price the best Chinese tech assets. And this struggle is just beginning.