2024 Review & 2025 Outlook for Chinese Mainland & HK IPO markets

Deloitte China's Capital Market Services Group (CMSG) just released its 2024 review and 2025 outlook for the Chinese mainland and Hong Kong initial public offering (IPO) markets.

According to its analysis, National Stock Exchange of India has emerged to become the world’s largest IPO venue in 2024 by IPO funds raised, following its listing the world’s 3rd largest IPO by a Korean car manufacturing group and a large deal volume. Nasdaq and New York Stock Exchange came 2nd and 3rd. The former's position was due to the completion of the world’s largest IPO for a cold storage warehousing company. The latter had more larger listings. Listings of a Chinese home appliance group, beverage company, an integrated logistical services company and an advanced driver assistance systems and autonomous driving solutions provider cemented 4th place for Hong Kong Stock Exchange. Tokyo Stock Exchange rose to 5th as a result of its listing a subway operator. Shanghai Stock Exchange and Shenzhen Stock Exchange took 6th and 8th respectively.

As a result of a heightened scrutiny over the entire capital market and implementation of new capital market measures and policies, including the State Council’s nine new measures, IPO activity in the A-share market in 2024 was significantly lower than it was in 2023. As regulators continue to put the potential issuers first, support the technology and innovation sectors, and encourage companies to enhance and consolidate their sectors through mergers, acquisitions and restructurings, the number of new listings and funds raised in the A-share market in 2025 are expected to increase from the levels seen in 2024. 

The Hong Kong IPO market started to pick up in September 2024 with a mega listing and upon the US Fed cut its interest rate for the first time in four years and China introduced economic stimuli. In 2025, the Capital Market Services Group predicts that listings from A-share issuers, leading Chinese companies, US-listed China concept stocks, and overseas companies will drive the Hong Kong IPO market. The market should record about 80 IPOs raising approximately HKD130 billion to HKD150 billion. Technology, life science and health care and consumer business will remain the drivers of the IPO market. 

This represents a substantial opportunity for the Hong Kong market, especially considering that only about one-third of the top 500 A-share listed companies by market capitalization are currently listed in Hong Kong. 

In addition, potential changes to Sino-US trade relations under the incoming US administration might increase geopolitical uncertainties, prompting more Chinese companies and US-listed China concept stocks to turn to Hong Kong as their preferred overseas listing hub. Alongside the prospect of further US interest rate cuts and additional Chinese economic stimulus policies aimed at sustaining growth, these factors are expected to bolster the momentum and investor sentiment in Hong Kong’s IPO market as we move into 2025.

The Capital Market Services Group believes some smaller Chinese businesses, especially from the technology segment will still flock to the US given the receptiveness of US' investors towards innovative business models, its longstanding reputation as an international market, and the availability of more comparable peers in the market for better valuations.