Feng Huang Wang·2025-10-09 01:33Core Insights - The Hong Kong IPO market has experienced significant growth in the first three quarters of 2025, leading globally with 68 new listings and total fundraising of HKD 182.45 billion, representing a 51% and 227% increase year-on-year, respectively [1][4] - The market has seen a high level of oversubscription, with 98% of new stocks being oversubscribed and 86% having oversubscription multiples exceeding 20 times, doubling from the previous year [1][4] - The decline in the first-day drop rate to 24% marks a nine-year low, with an average first-day return of 28%, significantly up from 10.82% in the previous year [6][7] Market Activity - A total of 15 new stocks had oversubscription multiples exceeding 1,000 times, accounting for nearly 23% of the new listings, with the highest being Daheng Technology at 7,558.40 times [2][3] - The pharmaceutical and durable consumer goods sectors have been particularly favored, with several biotech companies achieving high oversubscription rates, indicating strong investor interest in innovative drug companies [2][3] Regulatory Environment - The recent surge in market activity is attributed to a healthier growth environment following regulatory changes that ended the era of high-leverage IPO subscriptions, with the Hong Kong Securities and Futures Commission implementing measures to curb excessive leverage [4][5] - The previous year saw only 2 new stocks with oversubscription multiples exceeding 1,000 times, highlighting the shift in market dynamics post-regulation [4][5] Investment Returns - The significant increase in first-day returns and the reduction in the drop rate have contributed to a more favorable investment environment, attracting more investors to the IPO market [6][7] - The performance of large new listings, such as NIO's H-shares, which saw a first-day increase of 16% and a cumulative rise of over 87% by September 30, has further enhanced the appeal of IPO investments [6][7] Market Drivers - The robust performance of the Hong Kong IPO market is driven by a combination of policy incentives, ample liquidity, and an evolving industrial landscape, with the medical and pharmaceutical sectors leading in new listings [7][8] - The Hong Kong Stock Exchange has received 348 listing applications as of October 5, 2025, indicating strong interest from companies, particularly in the technology and consumer sectors [7][8]