Hong Kong has emerged as the leading global market for initial public offerings (IPOs), raising more funds than both the New York Stock Exchange and Nasdaq last year, according to KPMG. This strong momentum continued into the first quarter of 2026, with more than 600 companies currently waiting to list on the Hong Kong exchange as of June 8, 2026 [1]. Despite this impressive fundraising activity, the performance of newly listed stocks has been lackluster. Out of 179 IPOs since January 2025, about half have traded lower over the past three months, a trend that contrasts with the mild drop in the benchmark Hang Seng index and gains of over 10% for the FTSE Renaissance Global IPO Index during the same period [1].
The underperformance is particularly pronounced among stocks included in the Stock Connect program, which allows mainland Chinese investors to buy Hong Kong-listed shares directly. Of the 33 stocks that joined the Connect on March 9, more than half more than doubled in price between their IPO and the last trading day before inclusion. Eight stocks, including AI startup Deepexi, surged by more than 300% during that period. However, all eight have since dropped by 10% or more, with Deepexi down 51% as of June 3, 2026 [1].
This volatility has attracted attention from Beijing, with the state-backed Securities Times highlighting concerns over sharp rallies and subsequent declines in Hong Kong IPOs on May 29, 2026 [1]. Analysts point to capital retreating to mainland China's often cheaper A shares after stocks join the Connect program, as noted by Leonid Mironov of Gavekal. Ding Wenjie of China Asset Management Co. observed that some funds in Hong Kong have used Connect inclusion to generate additional returns [1].
Goldman Sachs predicted that Hong Kong listings will raise about $60 billion in 2026, nearly double the $36 billion raised in 2025. However, the firm recently downgraded Hong Kong H shares in favor of mainland Chinese A shares, citing greater exposure to artificial intelligence hardware plays. Benjamin Cavender of China Market Research Group commented that low fees, weaker fundraising, and intensifying competition have put pressure on China's financial sector, leading to a focus on short-term performance. HKEX stated that share price performance is influenced by a range of factors [1].
Looking ahead, Knowledge Atlas Technology, the company behind AI model Zhipu, is among the high-profile stocks expected to begin trading in Shanghai, which may serve as a test for market sentiment and performance [1].
CONCLUSION
Hong Kong continues to dominate global IPO fundraising, but persistent weak performance among newly listed stocks is raising concerns among investors and regulators. The trend of capital shifting to mainland A shares and recent analyst downgrades suggest ongoing challenges for Hong Kong's IPO market. Upcoming listings, such as Knowledge Atlas Technology, will be closely watched as indicators of future market direction.