Goldman Sachs: Hong Kong IPO market is experiencing a strong recovery, expected to raise $60 billion by 2026.

A research report released by Goldman Sachs points out that after years of stagnation, Hong Kong's IPO market will experience a strong rebound in 2025, and accelerate further in 2026. The report indicates that in 2025, there will be 119 companies listed, raising a total of $37 billion. In the first half of 2026, 84 companies will be listed, raising $27 billion, with an estimated annual fundraising amount of $60 billion, indicating a significant market recovery. The report analysis suggests that this recovery is not only cyclical, but also driven by various macro, regulatory, and structural factors. By the end of 2024, policy changes have fueled a rebound in Hong Kong's stock market, reigniting corporate financing willingness. At the same time, the China Securities Regulatory Commission's implementation of "nine measures" has slowed down IPO activities in the A-share market, prompting more mainland companies to turn to Hong Kong as a listing channel, leading to a wave of dual listing of A-shares and H-shares. In addition, the Hong Kong Stock Exchange has introduced various facilitative measures, including allowing professional technology companies to submit confidential forms and optimizing application processes to further attract new economy companies to list in Hong Kong. The performance of new listings has been outstanding. New stocks from 2025 to 2026 will achieve a median return of about 20% in the first three months of trading, with an average return of 60%, surpassing previous years. The report points out that the outperforming new stocks are mostly large independent listed companies, focusing on high-growth industries, with cornerstone investors holding about 30% to 50%, indicating that institutional support has a positive impact on stock prices. Looking ahead, the market liquidity is sufficient and is expected to continue to support IPO activities. The report estimates that by 2026, total equity supply will reach $110 billion, including $60 billion in IPO financing and $50 billion in post-listing refinancing, which will be absorbed through multiple channels of demand, including corporate dividends and buybacks ($180 billion), global long-term capital reallocations ($200 to $300 billion), and southbound capital inflows ($200 billion). Despite the release of $230 billion in restricted stocks in the next 12 months, the potential inclusion of this index and the expansion of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect may bring passive and mainland capital inflows, creating an important liquidity buffer to alleviate selling pressure. The revival of the IPO market has also brought new opportunities for financial institutions. The report believes that this effectively reopens exit channels for financial investors, alleviates mainland liquidity tightening, and accelerates China's private equity investments once again. In the secondary market, the Hong Kong Stock Exchange (00388) and Chinese brokerage firms with strong overseas businesses will benefit from the recovery of major listing activities, while also creating opportunities for institutional investors to capture excess returns and optimize their portfolios. In conclusion, the report summarizes that a rebound in IPO activity typically boosts overall market sentiment, attracting global capital inflows for asset allocation. Currently, more and more global sovereign wealth funds and pension funds are participating as cornerstone investors in Hong Kong IPOs, reflecting the growing confidence of international investors in the market. This trend is expected to continue to support the development of the Hong Kong stock market.