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Hong Kong’s status as a global financial hub has been dealt several blows in recent years. First came clashes between police and pro-democracy protesters ahead of a national security law, passed by Beijing in 2020, that severely curtailed political freedoms in the city. That was followed by a lengthy period of draconian Covid-19 lockdowns. With the entrepot’s economy tied to fortunes on the mainland, China’s property market crash and its ensuing deflationary slowdown have made matters worse. The past five years have been characterised by stories of multinationals souring on the city and dwindling investor activity. This year, however, the outlook has brightened.
Hong Kong’s equity market is in the midst of an encouraging turnaround. In the first half of 2025, it was the world’s number one listing venue, raising $13.9bn in initial public offerings and secondary issuance, according to data compiled by KPMG that excludes special purpose acquisition company deals. Over 200 companies applied for listings on its stock exchange in the first six months of the year. In June, 75 companies applied — a record number for a single month.
Recent activity has been dominated by secondary listings of Chinese companies, including electric battery group CATL, which raised $5.3bn. On Tuesday the FT reported that the Singapore-based online retailer, Shein, had confidentially filed for a Hong Kong IPO too, amid drawn-out efforts to list in London.
A confluence of factors is behind the revival in deals. First, the breakthrough of DeepSeek — a Chinese artificial intelligence start-up — in January encouraged mainland retail investors to plough money into the Hong Kong Exchange via the stock connect with the Shanghai Stock Exchange, as they sought exposure to tech shares. That has boosted liquidity and stock prices. The Hang Seng index has risen over 20 per cent this year.
Second, regulatory risks in China — and greater scrutiny of Chinese companies in the US — have reinforced the city’s position as a go-between for companies seeking to expand internationally without the mainland’s capital restrictions. The Hong Kong Exchange has also established separate listing routes for specialist tech companies, and recent visits to the city by mainland policymakers have helped convince investors that Beijing views it as a key offshore capital market, rather than a threat to other Chinese hubs.
The IPO boom illustrates how a fillip to investor sentiment, combined with existing geographic advantages, can catalyse stock market activity — sparking hope, and inspiration perhaps for London. Still, it is too early to claim that the city’s global standing is sustainably on the up again. New listings are yet to significantly broaden out beyond Chinese companies. International banks, law firms and companies remain cautious over hiring and investment as they try to navigate tensions between the west and China. Beijing’s grip on local politics fuels concerns around the rule of law, which had previously been one of Hong Kong’s main selling points compared to the mainland.
The city’s broader economic environment remains weak too, partly because the loss of some businesses and workers has left it more dependent on the Chinese economy. Retail and tourist spending activity is still below pre-pandemic levels. Private sector confidence dropped to its lowest level in close to five years at the end of the second quarter, according to S&P Global.
The recent rebound in IPO activity is less a sign of a lasting recovery than a reminder of the city’s latent potential. Hong Kong prospers best when it connects China and the world. But as long as Beijing’s influence continues to cast uncertainty over its business environment, its full promise as a global financial hub is likely to remain unfulfilled.