Hong Kong’s Equity Markets: The Resurgence Investors Can’t Ignore in 2025
Hong Kong’s equity capital markets have staged a remarkable comeback in the first half of 2025, signaling a renewed investor confidence in the region and, more broadly, in China’s economic prospects. After years of volatility and market stagnation, this revival is not just a fleeting moment—it’s a structural shift that savvy investors and advisors need to understand and capitalize on now.
What’s Driving the Surge?
At the heart of this resurgence is a powerful combination of factors: major capital raisings, a wave of “A to H” share listings (where mainland Chinese companies dual-list in Hong Kong), and the looming IPO of retail giant Shein. The latter alone could be a game-changer, potentially restoring Hong Kong’s stature as a premier global fundraising hub amid ongoing geopolitical uncertainties.
To put this into perspective, Hong Kong’s Hang Seng Index has surged 21.2% year-to-date, positioning it as one of the best-performing major markets worldwide. This is despite the ongoing tariff negotiations between China and the U.S., which continue to inject volatility into global markets.
The New Investment Landscape: A Divided World
James Wang, Goldman Sachs’ head of Asia ex-Japan equity capital markets, encapsulates the new reality: “The new era has come which is a more divided world.” This geopolitical bifurcation is prompting a structural realignment of capital flows. According to Wang, capital is increasingly moving out of the U.S. and into Asia, creating fresh opportunities for investors who can navigate this evolving landscape.
Supporting this trend, data from the London Stock Exchange Group (LSEG) shows a 15.3% increase in total equity issuance across Asia (including Japan) in the first half of 2025, rising to $116.2 billion from $100.7 billion last year. Hong Kong alone saw combined IPO and secondary listing proceeds skyrocket to $12.8 billion—an eightfold increase from the same period last year.
What This Means for Investors
Despite the rally, IPO markets remain cautious. Investors are more comfortable with “A to H” listings where there is an existing price benchmark, but standalone IPOs still face skepticism due to the lack of clear valuation benchmarks. This caution is understandable given the persistent global volatility.
However, major deals like battery maker CATL’s $5.3 billion listing and electric vehicle giants Xiaomi and BYD raising a combined $11 billion demonstrate strong institutional appetite for quality assets in the region. JPMorgan’s Sunil Dhupelia notes that many global investors are reducing underweight positions and seizing liquidity events to increase exposure to Hong Kong and mainland China equities.
Unique Insight: The Policy Cushion and Resilience Factor
What many investors overlook is China’s proactive policy stance. In May 2025, China cut benchmark lending rates for the first time since October, signaling a commitment to cushioning the economy against trade war pressures. Premier Li Qiang’s recent assurances of “forceful steps” to boost domestic consumption reinforce this supportive backdrop.
UBS’s Aaron Oh highlights that China still holds “chips in their bag” to support markets, and the economy’s resilience amid global trade uncertainties provides a psychological comfort to investors. This policy cushion is a critical factor that should encourage investors to look beyond headline risks and focus on long-term growth potential.
Actionable Takeaways for Advisors and Investors
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Rebalance Portfolios Toward Asia: With capital flowing out of the U.S. and into Asia, advisors should consider increasing allocations to Hong Kong and mainland Chinese equities, particularly in sectors benefiting from technological innovation and green energy.
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Focus on Quality IPOs and Secondary Listings: Given the preference for “A to H” listings, investors should target companies with established mainland valuations to mitigate IPO valuation risks.
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Monitor Policy Developments Closely: China’s monetary easing and consumption-boosting policies are key to sustaining market momentum. Staying informed on these moves can help anticipate market shifts.
- Prepare for Volatility but Think Long-Term: While short-term volatility remains, the structural shift toward Asian markets represents a multi-year investment theme. Patience and strategic positioning will be rewarded.
What’s Next?
As the Shein IPO approaches, all eyes will be on Hong Kong’s ability to attract marquee listings that can cement its role as a global capital hub. Meanwhile, the broader trend of capital inflows into Asia is likely to accelerate, especially if U.S.-China tensions stabilize or if China’s policy support deepens.
Investors who move early to understand and engage with this evolving landscape will be best positioned to capture outsized returns. At Extreme Investor Network, we believe this is not just a market rebound—it’s a paradigm shift. Stay tuned as we continue to bring you exclusive insights and actionable strategies to navigate and profit from this new era in global investing.
Sources:
- London Stock Exchange Group (LSEG) equity issuance data
- Statements from Goldman Sachs, JPMorgan, UBS executives
- Reuters coverage on Shein IPO and China’s policy moves
Source: Hong Kong’s equity capital markets bounce back in first half, as Shein IPO looms