From ~HK$333 billion raised in 2021 to ~HK$46 billion in 2023 — an 89% collapse in four years — and a fall out of the global IPO top five. The 2024 "rebound" to HK$83bn relied on a single Midea deal (HK$35.7bn). Is this a fixable technical problem or an unfixable geopolitical one?
1. The reform stack — and what it couldn't fix
Hong Kong threw the rulebook at the problem: Chapter 18A (biotech), 18B (SPACs), 18C (specialist tech), GEM reform, digital-asset ETFs, new listing-timetable tweaks. Each was individually sensible. Collectively they treated a demand problem with supply-side medicine.
| Reform | What it fixed | What it couldn't fix |
|---|---|---|
| Chapters 18A/18B/18C | Listing eligibility for new economy sectors | Investor appetite for Chinese risk |
| Listing-timetable tweaks | Process friction | Valuation discount vs A-shares |
| New products (ETFs etc) | Product shelf | Where the marginal buyer lives |
2. Why the companies don't come
- The valuation discount: the same issuer can list onshore at 2–3× the multiple — a rational CFO chooses A-shares.
- The risk premium is geopolitical: US-China tension raises the required return on all Chinese assets — Hong Kong wears the discount even for good issuers.
- Liquidity begets liquidity: thin secondary trading feeds back into weak primary demand — a self-reinforcing loop reforms alone can't break.
RegSir's take
Honest diagnosis: the 2024 "rebound" was one mega-deal, not market breadth — ex-Midea, proceeds were flat with 2023. The reforms are good plumbing; the problem is that nobody can regulate away a risk premium. Hong Kong's recovery depends on two things it doesn't control: Chinese asset prices recovering globally, and US-China friction easing. Meanwhile the city should stop counting headline IPO dollars and start counting breadth — number of deals, median size, post-listing turnover — because the current metric lets one whale fake a recovery.
3. Compliance takeaways
- Listing-venue advice needs the full picture: valuation, aftermarket liquidity and exit paths matter more than eligibility.
- Sponsor diligence survives the drought: SFC sponsor enforcement kept pace through thin markets — a slow pipeline doesn't lower the bar.
- Corroborate the "recovery" narrative: breadth metrics (deal count, median size) are the honest signal for business planning.
4. Official sources & reporting
| Document / report | Link |
|---|---|
| HKEX market statistics — IPO proceeds 2021–2024 | hkex.com.hk ↗ |
| Listing Rules Chapters 18A/18B/18C | en-rules.hkex.com.hk ↗ |
| Midea H-share listing prospectus (2024) | hkexnews.hk ↗ |