Amidst deepening global uncertainties, Hong Kong orchestrates a revival
Hong Kong Stock Exchange Remains Asia's Premier Financial Hub
The Hong Kong Stock Exchange (HKEX) continues to hold its position as one of the world's largest stock exchanges, with a market capitalization of approximately $3.732 trillion. In the first half of 2025, the city's IPO market has thrived, raising approximately HK$107 billion ($13.6 billion), making it the global leader in IPO fundraising.
The success of Hong Kong's stock market can be attributed to several factors. Companies seeking alternatives to direct U.S. exposure while maintaining international market access are increasingly turning to Hong Kong amidst heightening U.S.-China tensions. Additionally, the strategic refinement of the HKEX can facilitate secondary and dual listings for major regional players and large-cap companies.
The changes to the HKEX listing rules are intended to ensure better price accuracy for IPOs and improve long-term price discovery. One such change is the lowering of the initial public float from 15 percent to 10 percent, which is targeted at A+H issuers, making it easier for them to list in Hong Kong.
The CSRC Filing Regime, launched in March 2023, has tightened oversight requirements for overseas listings, pushing mainland companies toward H-share structures rather than red-chip arrangements. This, coupled with the advantages of substantial liquidity, strong regulatory systems, and smooth access to domestic markets via programs like Stock Connect, has made Hong Kong a preferred choice for mainland companies.
The HKEX is not only attracting mainland Chinese companies but also international ones. Over 300 listing applications were being processed by the HKEX in the first half of 2025, and international companies invested over HK$ 470 billion in M&A transactions in Hong Kong during the first five months of the year.
International investors find Hong Kong's common law legal system, freely convertible currency, and status as the world's largest offshore RMB liquidity pool facilitating seamless capital flows, making it the preferred launchpad particularly for Southeast Asia and Middle East/Africa investments.
However, Hong Kong is not without competition. Other Asian financial hubs, such as Shanghai, are increasingly challenging Hong Kong's dominance as Asia's legal hub, diverting some capital flows from Hong Kong. Nevertheless, the recent rule changes to the HKEx listing rules are expected to significantly strengthen Hong Kong's status as Asia's premier financial centre, attracting even more mainland Chinese companies - including large-scale ones - to pursue listings in Hong Kong.
In addition, the HKEX is attracting interest from Middle Eastern and ASEAN companies for secondary listings, positioning itself as a bridge for foreign investors to access China's massive market. The rebound in Hong Kong's capital markets and M&A activities in 2025 underscores the city's resilience and its continued appeal to global investors.
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