Source: Hong Kong Exchanges and Clearing Limited, as of 20 May 2025
Regulatory impact on Hong Kong listings
In 2020, Chinese regulators shocked markets by halting Ant Group’s HK$289 billion IPO just before listing, citing concerns about systemic financial risks from rapidly expanding fintech operations. This unprecedented move signalled the beginning of broader reforms.
Shortly afterward, the central government announced sweeping regulatory changes, including anti-trust investigations and property speculation crackdowns. These uncertainties, combined with disappointing stock market performance, reduced new listings between 2021 and 2023.
The recent uptick in IPO activity correlates with the Chinese government’s stimulus package in 2024, which has catalysed a strong market rally. This improvement has created a more favourable environment for companies considering public listings.
US-China relations have also influenced listing decisions, with some Chinese companies currently listed in the US seeking Hong Kong listings to mitigate risks. These companies aim to protect themselves against potential US delisting amid escalating geopolitical tensions.
Performance of newly listed stocks
Contrary to common belief that newly listed stocks generally perform well short-term, our analysis of 464 main board listings since 2020 (excluding transfers from the Growth Enterprise Market) reveals a more nuanced picture. On average, 61% of new listings trade higher than their IPO price on the first day. This percentage improves during years of stronger broader market performance, reaching 67% in 2020 and 64% in 2024.
However, when extending the holding period to one week after listing, the proportion of profitable new listings drops to 53%, and further declines to 49% after one month.
This trend reinforces the need for investors to look beyond initial excitement and evaluate the long-term potential of new listings. Investors should conduct thorough research before participating in IPOs. Understanding a company’s fundamentals (including its business model, strategic growth plans, and valuations) alongside the macroeconomic environment remains essential when trading newly listed stocks.
