The landscape for Chinese companies seeking public listings has undergone a dramatic transformation, with a clear pivot from US exchanges to Hong Kong’s booming market. This shift is driven by escalating geopolitical tensions, stricter regulatory oversight from both Beijing and US authorities, and Hong Kong’s emergence as a welcoming alternative for equity capital raising. According to J.P. Morgan’s Asia Pacific equity capital markets head Peihao Huang, “We expect a very busy Q4 and first-half 2026 with a super strong pipeline,” highlighting the sustained momentum in Hong Kong listings.
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US Listings Plummet as Chinese Firms Retreat
Chinese initial public offerings in the United States have experienced a staggering decline, with deal values dropping 93% from the 2021 peak of $13 billion across 39 listings to just $875.7 million from 23 deals this year. This retreat marks a significant reversal from 2021, when Chinese IPOs in the US were heading toward record levels before Beijing intensified supervision of domestic companies. The turning point came when ride-hailing giant Didi Global proceeded with its New York listing despite regulatory concerns, prompting immediate backlash and ultimately leading to its delisting within six months.
The decline reflects broader challenges facing Chinese companies in the US market, where heightened scrutiny and political pressures have created an increasingly hostile environment. As Mergermarket’s APAC equity capital market head Perris Lee notes, “Chinese listings in the U.S. have pretty much become non-existence since Didi Global’s ill-fated IPO,” underscoring how regulatory interventions have reshaped market dynamics.
Hong Kong’s IPO Surge: A Perfect Storm of Favorable Conditions
While US listings falter, Hong Kong has emerged as the clear beneficiary, with Chinese IPOs surging 164% year-on-year to raise $18.4 billion from 56 listings. The Asian financial hub is on track to become the world’s largest listing destination this year, boosted by several billion-dollar deals including Contemporary Amperex Technology’s $5.3 billion offering and Zijin Gold’s $3.2 billion listing.
Multiple factors are driving this boom, including improved fundraising conditions following Beijing’s supportive measures introduced in September last year. The unexpected rise of Chinese AI startup DeepSeek has further fueled interest in technology and artificial intelligence sectors, creating a virtuous cycle of investor enthusiasm. As noted by Asia Pacific market observers, this momentum appears sustainable, with PwC projecting up to 100 Hong Kong IPOs this year raising over $25.5 billion.
Beijing’s Tightening Grip on Overseas Listings
A critical factor driving the shift to Hong Kong is Beijing’s increasingly assertive control over where Chinese companies can list. The government has maintained firm oversight of capital outflows, including stock offerings overseas, with particular scrutiny applied to strategic industries. This regulatory preference was dramatically demonstrated in 2020 when authorities halted Ant Group’s planned dual listing in Hong Kong and Shanghai just days before what would have been the world’s largest IPO.
The message has been reinforced through subsequent cases, including Shein’s abandoned US listing plans. As Lee explains, “Shein’s failed attempt to get listed in the U.S. has only further underscored Beijing’s regulatory preferences on where its companies should get listed — either at home or Hong Kong.” This centralized control extends beyond traditional equity financing decisions, reflecting broader geopolitical considerations and capital control priorities.
US Regulatory Hurdles and Delisting Risks Intensify
Concurrently, US regulators and lawmakers have raised the bar for Chinese listings, creating additional headwinds for companies considering American exchanges. The US Securities and Exchange Commission has specifically targeted China in seeking higher disclosure requirements, while lawmakers have repeatedly called for delisting Chinese firms citing national security concerns. These developments mirror regulatory challenges seen in other sectors, similar to how energy markets face evolving compliance requirements across different jurisdictions.
The Nasdaq has particularly tightened scrutiny of small Chinese IPOs, proposing additional requirements that would mandate companies operating primarily in China to raise at least $25 million to list on the exchange. As Aerion Capital managing partner Steve Markscheid observes, “This certainly raises the bar,” potentially pushing more Chinese firms toward alternative listing strategies including SPACs or reverse takeovers. This regulatory escalation reflects broader technological competition, reminiscent of how AI innovation is driving corporate strategy shifts across multiple industries.
Dual Listings and Secondary Offerings Gain Momentum
The convergence of these factors has accelerated plans for dual listings and secondary offerings in Hong Kong among US-listed Chinese companies. Lidar sensor maker Hesai Group, which has been on the Pentagon’s blacklist since 2023, raised $535 million in its Hong Kong listing last month, becoming the latest in a series of such moves. Hotel chain Atour Lifestyle Holdings and robotaxi firm Pony AI are also pursuing Hong Kong listings, with the latter receiving regulatory approval this week.
This trend reflects strategic repositioning similar to how mergers and acquisitions require careful preparation in volatile market conditions. Even Temu parent PDD Holding has taken preparatory steps by switching to a Hong Kong-based auditor, signaling potential plans for a secondary listing. These moves demonstrate how companies are building contingency plans amid geopolitical uncertainty, much like how trade relationships require adaptive strategies in changing economic environments.
Hong Kong’s Regulatory Innovations Fuel Growth
Hong Kong regulators have actively facilitated this shift through strategic initiatives, including the May introduction of a “Technology Enterprises Channel” to streamline IPO approvals for specialist technology and biotech companies, particularly those already listed on mainland exchanges. This regulatory flexibility stands in contrast to the tightening requirements in US markets and reflects Hong Kong’s positioning as China’s primary offshore fundraising hub.
The approach mirrors how regulatory simplification can stimulate market activity in complex financial environments. Combined with attractive valuations in Chinese equities and global funds’ cautious repositioning after years of being “structurally underweight” on China, these developments have created ideal conditions for Hong Kong’s IPO market expansion. Even amid recent market volatility following renewed US-China tensions, the Hang Seng Index has advanced 27% this year, demonstrating underlying strength.
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Future Outlook: Sustained Momentum with Strategic Implications
The reconfiguration of Chinese companies’ listing preferences appears structural rather than cyclical, with profound implications for global capital markets. As J.P. Morgan’s Huang notes, the pipeline remains “super strong” through 2026, driven by both mainland companies seeking Hong Kong dual listings and new IPOs. This sustained activity will likely reinforce Hong Kong’s position while diminishing US exchanges’ role in Chinese capital formation.
The evolution reflects how technology platforms must adapt to changing environments, with companies prioritizing regulatory certainty and market access. With more than 280 Chinese companies still listed on major US exchanges with a total market capitalization of $1.1 trillion, the potential for further migration remains significant, particularly as small-cap companies face the greatest challenges in meeting heightened US requirements. This ongoing rebalancing will continue to reshape the global financial landscape for years to come.
