Hong Kong IPO rebound faces pricing hurdle

Weak trading debuts could weigh on investor appetite.

Hong Kong’s plan to ease listing rules for founder-led companies could lift initial public offering (IPO) fundraising to $350b this year, though analysts said firms would still compare valuations and investor demand against rival markets before choosing the city.

Neha Singh, co-founder and CEO at Tracxn Technologies Ltd., said companies would continue comparing how much capital they can raise in Hong Kong against mainland exchanges and the Nasdaq Stock Market.

“Hong Kong-listed companies often trade at lower prices,” she told Hong Kong Business via Zoom. “This could also mean founders and existing investors would have to give up a bigger share of the company when they list.”

A report by KPMG International Ltd. showed Hong Kong IPO proceeds surged almost six times year on year to $109.9b in the first quarter, whilst listings rose to 40 from 15.

The government said in February it would review listing rules for companies with weighted voting right structures and make it easier for overseas-listed firms to pursue secondary listings.

Hong Kong Exchanges and Clearing Ltd. followed in March with proposals to lower financial thresholds for such companies, structures commonly used by founder-led firms seeking to retain control after listing.

KPMG expects Hong Kong IPO fundraising to rise to $350b this year from $285.8b in 2025.

Singh said trading remains concentrated in a small number of stocks, with Mainland Chinese investors accounting for nearly 80% of participation. “Foreign capital has fluctuated because of geopolitics and broader market conditions,” she added.

Post-listing share performance might also affect investor appetite for future offerings, Singh said, citing weaker trading debuts by companies such as Pony AI, Inc. and WeRide, Inc.

“Not every company experiences a strong post-listing performance,” she pointed out. “When IPOs do not perform well, it can have a knock-on effect on investor appetite for subsequent offerings.”

Eddie Wong, leader of capital markets at PwC Hong Kong, said lower thresholds could widen the pool of eligible companies, especially overseas founder-led firms.

He added that broader confidential filing arrangements could help technology companies protect sensitive business and financial information before listing.

“Only biotech and specialist technology companies, along with some secondary listing applicants, can file listing applications privately before going public with their plans,” Wong said in an emailed reply to questions.

Kei Hasegawa, a partner and Hong Kong office manager at YCP Holdings Ltd., said the reforms could benefit growth companies in sectors including healthcare, logistics, retail, and platform businesses.

“We are seeing increasing interest amongst growth companies across Southeast and Northeast Asia,” he said in an email.

Still, the broader test would be whether Hong Kong can sustain IPO momentum beyond large Mainland Chinese and dual-listed offerings, he pointed out.

Singh said dual listings are becoming more common, accounting for about 13% of Hong Kong listings in 2025 and 23% in the first quarter of 2026.

Wong said Hong Kong could also consider creating a separate trading platform for startups and smaller firms, particularly early-stage biotechnology and technology companies seeking capital before qualifying for main board listings.

“Continuous enhancements to tax policies, capital flows, and investor engagement are required to maintain competitiveness,” he added.