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Hong Kong is setting its sights on a $20bn listings revival this year as it aims to exploit worsening US-China tensions and the sluggish mainland Chinese equity market.
Investment banks in Hong Kong are expecting a rush of listed Chinese companies, led by battery maker CATL, to set up a secondary listing in the offshore territory. These “A to H” listings — from China “A” shares to Hong Kong — could raise as much as $20bn in new funds, bankers say.
A replenished pipeline would mark a sharp pick-up in activity for Hong Kong, which has lost some high-profile international companies such as cosmetics company L’Occitane and struggled to replace them.
Many of those companies in China turning to Hong Kong have extensive overseas operations and want to raise funds outside the mainland, as Beijing tightens capital leaving the country. Geopolitical tensions between China and the US have made listings in New York, another common pathway for Chinese companies, far less appealing.
“The Hong Kong market will bounce back this year . . . and a big component of that will be A to H listings”, said Kenneth Chow, managing director at Citi in Hong Kong. He added that Chinese secondary listings could account for as much as “two-thirds” of the total estimated $20bn of listings in Hong Kong in 2025.
Among the companies this year that have confirmed plans to set up secondary listings are pharmaceuticals producer Jiangsu Hengrui, which has a market capitalisation of $37bn, and soy sauce maker Foshan Haitian, valued at $32bn.
CATL has not yet filed papers to the Hong Kong stock exchange but Morgan Stanley estimates it could raise up to $7.7bn — a move that has been complicated by its addition to a Pentagon list of companies with links to China’s military.
Even so, there are signs of a market eager for new listings. Chinese banks have offered to work on the CATL listing for underwriting fees of just 0.01 per cent, the Financial Times reported on Wednesday.
Analysts at Deloitte’s capital market services group estimate that Hong Kong will have 80 initial and secondary listings this year, raising up to HK$150bn (US$19bn), mostly by Chinese companies. They would join household names that record much of their profit outside of the mainland, including BYD and Tencent.
An influx would also offer a shot in the arm to Hong Kong’s reputation as an international business hub. More than $10bn in equity was raised, in primary and secondary listings, in the city last year, according to Dealogic. That marked an improvement on 2023’s total of $6bn but fell far short of the record $51bn raised in IPOs in 2020 according to HKEX data. That bumper year was also driven by Chinese companies seeking listings outside the mainland.
The mainland Chinese securities regulator has further eased the path for companies to list in Hong Kong to help them expand internationally, including a recent pledge to “optimise the filing system for overseas listing”. Other Chinese companies have also given up their listings in New York in recent years, citing the high administrative burden and low turnover.
“We expect the volume of listings, including those of A+H share offerings, to gain further momentum in 2025, as more leading companies from China and around the world use [the HK] platform to expand internationally,” a spokesperson for the Hong Kong stock exchange said.
Analysts say US President Donald Trump’s policy towards China could send more companies to the territory.
Many Chinese companies were forced to delist from the US in the final days of Trump’s first administration, when the president issued an executive order, citing fears of links to the Chinese military.
“Geopolitical uncertainties [could prompt] more Chinese companies and US-listed China concept stocks to turn to Hong Kong as their preferred overseas listing hub,” Edward Au, southern region managing partner at Deloitte China, said in a report.
Industry executives say companies going to Hong Kong will hope to replicate the performance of Midea. The household appliance maker raised about $5bn in an oversubscribed offering and its shares are up 27 per cent since its September float. That rate of growth is faster than its Chinese equivalent and narrowed the discount to the mainland A share.
A company listed in China typically trades at a premium to its Hong Kong counterpart of as much as 40 per cent, due to the mainland market’s higher level of local retail participation.
Regulators are closely watching the likely valuation of H shares and their discount to A shares. A capital markets banker in Hong Kong told the FT that he had had discussions with Chinese authorities about the potential valuation of H shares.
Authorities have focused on liquidity potentially leaving the country, devaluing Chinese companies and encouraging arbitrageurs looking to make a profit from the difference in prices between the two stocks.
Large-cap Chinese companies such as BYD tend to have a much smaller discount in Hong Kong, while smaller companies are relatively unloved outside of the mainland.
“The bigger challenge for our . . . projects is if we can narrow the discount between A and H shares even further,” said one executive at a Chinese brokerage firm.
“We also think that there is a high probability that there will be a further rebound [in activity] in 2025,” he said. He also expects about $20bn in fundraising this year but added that “this is purely our own estimate”.
Data by Haohsiang Ko
