Illustration: Chen Xia/GT

Hong Kong's capital market is experiencing a surge in IPOs, driven by renewed investor enthusiasm for Chinese mainland tech companies, a development that is cementing the city's position as a global financial hub. 

Five mainland companies made their trading debuts in Hong Kong on Wednesday as the Hong Kong stock exchange experienced its busiest day of the year for new listings, the South China Morning Post reported.

This flurry of public floats could serve as a microcosm of a boom in Hong Kong's IPO market in 2025. In the first half of the year, HK$107 billion ($13.6 billion) was raised through 42 IPOs, putting the city's exchange in first place for funds raised globally, Hong Kong Financial Secretary Paul Chan Mo-po stated in an online post on Sunday. The amount raised so far this year is 22 percent higher than in the whole of 2024.

This phenomenon is the result of a combination of factors such as policy guidance, reallocation of global capital, and the growing appeal of mainland tech companies. It not only enhances Hong Kong's status as an international financial hub, but also underscores China's ability to advance capital market development in a complex international environment.​

Policy support provides the biggest driving force. The central government has put an emphasis on enhancing Hong Kong's status as an international financial center. Support policies were rolled out in Hong Kong in 2024, from streamlining listing approval processes to easing access for emerging industries like biotechnology. These measures, combined with tax incentives for high-growth sectors, have lowered barriers for mainland companies, particularly in innovation-driven industries, further enriching the industrial structure of the Hong Kong market.

Global macroeconomic shifts have amplified Hong Kong's appeal. Against the backdrop of the Federal Reserve's monetary policy shift, high US fiscal deficits, and a weakening dollar, institutional investors are accelerating the allocation of non-US dollar assets in search of new investment opportunities. Uncertainty surrounding US tariffs has further driven the trend in the global capital market.

In this context, Asian markets have become important destinations for the reallocation of global capital. As an important bridge connecting the Chinese mainland and international capital markets, Hong Kong has benefited from this process.

Hong Kong's appeal lies in its mature financial infrastructure and business-friendly policies as well as the dynamism brought by mainland tech and biotech firms. Today, mainland companies account for over 50 percent of listed firms in Hong Kong and 80 percent of its total market capitalization, a development underscored by the influx of high-growth enterprises from sectors like artificial intelligence, semiconductors, and pharmaceuticals. These companies represent the vanguard of China's economic transformation, offering global investors exposure to the world's most vibrant innovation pipeline. Their listings have transformed Hong Kong into a barometer of China's technological progress, attracting long-term investors seeking diversification beyond traditional Western benchmarks.

In recent years, the US has put pressure on US-listed Chinese companies, excluding them from its capital market under various regulations. This situation has increased the listing and operation costs of Chinese stocks in the US market by intensifying their market uncertainty, prompting more and more Chinese enterprises to reconsider their listing destinations. In this context, Hong Kong, with its unique institutional advantages, strategic location, and international environment, has become the top choice for mainland enterprises seeking to list overseas.

For mainland companies, listing in Hong Kong is more than just a financial decision; it is a platform to gain global attention. The successful listings of these enterprises have drawn the eyes of global investors, elevated their global image, and further solidified Hong Kong's position as an international financial center.​

Hong Kong's IPO boom is poised to continue as it navigates global economic shifts and leverages its unique role. With ongoing policy support, the influx of innovative mainland enterprises, and its position as a gateway for global capital to access China's growth story, Hong Kong is set to consolidate its role in the evolving global financial landscape.