DANIEL SORABJI

As US long-term Treasury yields climbed to their highest level since 2002, Hong Kong’s IPO market had already raised more in the first three quarters of this year than in the whole of last year.

The yield on 30-year US Treasury bonds rose to an intraday high of 5.623% on September 29, the highest since June 2002. The 10-year yield peaked at 5.297%. New York Federal Reserve president John Williams said further rate rises were not urgent after the Fed raised rates in September.

In Hong Kong, data from Tonghuashun iFinD showed that 116 companies had listed on the Hong Kong Stock Exchange by September 29, raising about HK$384.9 billion in total. That represented a year-on-year increase of about 144%, while the number of listings rose about 78%. After Huan Chuang Technology (stock code: 6802) listed on September 30, the number of companies listed in the first three quarters was expected to rise to 117, with total funds raised reaching about HK$385.6 billion. Hong Kong IPO fundraising for the whole of 2025 was about HK$285.7 billion, meaning the total for the first three quarters this year was already about 35% higher.

Fundraising was concentrated in two categories of companies. A total of 38 A+H companies already listed on the A-share market raised about HK$261.2 billion, or roughly 70% of the total. The technology hardware and equipment, communications, electronics and computer sectors together raised about HK$271.7 billion. During the same period, 61 new shares were more than 1,000 times oversubscribed. Some reports said overseas funds were accelerating their entry as cornerstone investors.

In the secondary market, Hong Kong Exchanges and Clearing data showed that average daily turnover in the cash market reached HK$283 billion in the first half, up 17.8% year on year. Average daily turnover in the second quarter rose to HK$289.5 billion, a quarterly record. The daily average in July was HK$307.2 billion, up 17% from a year earlier.

There have also been new developments involving Middle Eastern capital. Financial Secretary Paul Chan Mo-po said in an article published on July 12 that about 40% of the global asset allocation by Gulf sovereign wealth funds last year went to Asia. Hong Kong’s trade with Gulf countries increased by more than 35% year on year in the first five months of this year. In a September 13 blog post, Chan said the Oman Investment Authority planned to participate in the Hong Kong government’s Innovation and Technology Venture Fund, investing about HK$250 million in partnership with local fund companies. It would be the first Middle Eastern sovereign wealth fund to participate in the programme. Compared with the tens of billions of Hong Kong dollars raised in large IPOs, however, the amount remains small.

IPO fundraising does not necessarily mean that the secondary market will rise. The former depends on the pace of issuance and companies’ willingness to list, while the latter requires sustained inflows of new capital. At the same time, high US Treasury yields have increased the risk-free returns available on US dollar assets, creating competition for capital in offshore markets.

Four indicators will be worth watching:

  • Whether the average daily turnover figures for September and the third quarter released by HKEX can remain at recent levels;
  • Changes in the industry breakdown of new listings and the proportion of A+H companies;
  • Progress in Middle Eastern capital moving from stated intentions to actual investment projects;
  • Federal Reserve interest-rate decisions and the direction of US long-term Treasury yields.