The Hong Kong stock market’s tentative revival

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.Hong Kong’s standing as a world monetary hub has been dealt a number of blows lately. First got here clashes between police and pro-democracy protesters forward of a nationwide safety regulation, handed by Beijing in 2020, that severely curtailed political freedoms within the metropolis. That was adopted by a prolonged interval of draconian Covid-19 lockdowns. With the entrepot’s financial system tied to fortunes on the mainland, China’s property market crash and its ensuing deflationary slowdown have made issues worse. The previous 5 years have been characterised by tales of multinationals souring on the town and dwindling investor exercise. This 12 months, nevertheless, the outlook has brightened.Hong Kong’s fairness market is within the midst of an encouraging turnaround. Within the first half of 2025, it was the world’s primary itemizing venue, elevating $13.9bn in preliminary public choices and secondary issuance, in accordance with information compiled by KPMG that excludes particular goal acquisition firm offers. Over 200 corporations utilized for listings on its inventory trade within the first six months of the 12 months. In June, 75 corporations utilized — a document quantity for a single month. Latest exercise has been dominated by secondary listings of Chinese language corporations, together with electrical battery group CATL, which raised $5.3bn. On Tuesday the FT reported that the Singapore-based on-line retailer, Shein, had confidentially filed for a Hong Kong IPO too, amid drawn-out efforts to checklist in London.A confluence of things is behind the revival in offers. First, the breakthrough of DeepSeek — a Chinese language synthetic intelligence start-up — in January inspired mainland retail buyers to plough cash into the Hong Kong Trade through the inventory join with the Shanghai Inventory Trade, as they sought publicity to tech shares. That has boosted liquidity and inventory costs. The Hold Seng index has risen over 20 per cent this 12 months.Second, regulatory dangers in China — and better scrutiny of Chinese language corporations within the US — have strengthened the town’s place as a go-between for corporations looking for to develop internationally with out the mainland’s capital restrictions. The Hong Kong Trade has additionally established separate itemizing routes for specialist tech corporations, and up to date visits to the town by mainland policymakers have helped persuade buyers that Beijing views it as a key offshore capital market, fairly than a risk to different Chinese language hubs.The IPO increase illustrates how a fillip to investor sentiment, mixed with current geographic benefits, can catalyse inventory market exercise — sparking hope, and inspiration maybe for London. Nonetheless, it’s too early to assert that the town’s international standing is sustainably on the up once more. New listings are but to considerably broaden out past Chinese language corporations. Worldwide banks, regulation corporations and firms stay cautious over hiring and funding as they attempt to navigate tensions between the west and China. Beijing’s grip on native politics fuels considerations across the rule of regulation, which had beforehand been one in all Hong Kong’s foremost promoting factors in comparison with the mainland. Town’s broader financial setting stays weak too, partly as a result of the lack of some companies and staff has left it extra depending on the Chinese language financial system. Retail and vacationer spending exercise remains to be beneath pre-pandemic ranges. Non-public sector confidence dropped to its lowest stage in shut to 5 years on the finish of the second quarter, in accordance with S&P World. The latest rebound in IPO exercise is much less an indication of a long-lasting restoration than a reminder of the town’s latent potential. Hong Kong prospers greatest when it connects China and the world. However so long as Beijing’s affect continues to forged uncertainty over its enterprise setting, its full promise as a world monetary hub is prone to stay unfulfilled.