Peter Parks

How does HKIC’s ‘HK$1 to HK$8’ effect work, and what does it have to do with the HK$388 billion IPO boom?

Financial Secretary Paul Chan Mo-po said at the Global Financial Leaders’ Investment Summit on November 4 that every US$1 invested in companies at the early and growth stages could attract more than US$8 in long-term international capital. He also announced that Hong Kong’s initial public offerings raised HK$388 billion in the first three quarters of the year, while post-listing refinancing reached HK$570 billion.

What does the ‘one-to-eight’ ratio measure?

The ratio is not a new figure. In this year’s Budget, Chan said every dollar invested by the Hong Kong Investment Corporation, or HKIC, could mobilise more than HK$8 in capital investment. The HKIC’s 2025 annual report, published in July, also said its “capital mobilisation effect” had exceeded one to eight as of the end of 2025. For every dollar invested, more than HK$8 in long-term market capital was attracted through co-investment, with the funds coming from international institutions including overseas sovereign wealth funds and pension funds.

The ratio has risen markedly over the past year. The HKIC said in May 2025 that every dollar of investment attracted four dollars, while the figure rose to more than HK$5 in August that year and exceeded HK$8 by the end of 2025.

By the HKIC’s definition, the ratio reflects the amount of co-investment relative to its own investment. It does not say whether the funds would have been invested anyway without the HKIC taking a stake. As of the end of June this year, the HKIC had invested in more than 200 projects. Ten of the companies it backed had listed in Hong Kong, while more than 30 others had submitted, or were preparing to submit, listing applications within the year.

What makes up the HK$388 billion?

According to KPMG data, 116 companies listed in the first three quarters, raising more than HK$388 billion. That was the highest amount ever raised in the first nine months of a year. Full-year fundraising could reach HK$500 billion, potentially surpassing the annual record of HK$427 billion set in 2010. A+H listings accounted for 37 deals and nearly 70 per cent of total funds raised, while high-tech companies in areas including artificial intelligence, semiconductors and robotics accounted for more than half of the total.

Chan said about 60 per cent of the newly listed companies during the period had international businesses, with some setting aside proceeds in their prospectuses for overseas expansion. Post-listing refinancing of HK$570 billion was higher than the amount raised through IPOs during the same period. wenweipo

Offshore renminbi market

Chan said the outstanding amount of dim sum bonds in Hong Kong stood at close to 1.9 trillion yuan as of the end of June, equivalent to about HK$2.1 trillion. Five-year Chinese government bond futures were launched in August. People’s Bank of China governor Pan Gongsheng said on July 7 that he supported the Hong Kong Monetary Authority increasing the size of its renminbi business funding arrangement from 200 billion yuan to 500 billion yuan, or about HK$550 billion, with the usage period extended to no more than three years. By the end of August, Hong Kong’s total renminbi lending had exceeded 1 trillion yuan, equivalent to about HK$1.1 trillion.

In addition, the clearing house for derivatives operated by Hong Kong Exchanges and Clearing began accepting Chinese government bonds, policy bank bonds and Ministry of Finance bonds held through Bond Connect as non-cash collateral to meet margin requirements from November 2. On the first day, seven institutions submitted bonds worth more than 400 million yuan, or about HK$440 million. hkex

Chan said Hong Kong would continue to broaden its financing and asset-allocation options, enabling businesses to find suitable funding at every stage of development. The government said the next summit would be held in early November next year. tvb