Investors Go Euphoric as Hong Kong IPO Hits Jackpot With 30% Return

Hong Kong stocks went to month-highs in anticipation that the Federal Reserve would reduce interest rates due to a decline in global oil prices.

Ever since the Hong Kong IPO made an explosive comeback, investors got overjoyed, gaining over 30% despite a slow economy and sluggish real estate market.

After years of retreat, the eye-popping returns have enticed institutional investors to return to the third-largest stock market in Asia. Local investors have shifted from the real estate market, plagued by high borrowing costs and excessive supply, to the initial public offering (IPO) to increase their chances of winning share lotteries.

Thousands of people are hooked on this craze. They are investing in highly capitalized IPOs financed by margin borrowing equal to ten times the principal. They sell the shares on the first day of trade in the hopes of getting an average return of 10%.

Few asset classes have matched the Hong Kong IPOs. For example, gold increased 28%. The S&P 500 has increased less than 2% after recovering from President Donald Trump‘s “Liberation Day.”

Most of the gains happened after DeepSeek’s sudden fame earlier this year. The Hang Seng Index has increased by 18%, but momentum has now stopped.

22 out of 34 IPOs have outperformed their offer prices. Soft International Group, a manufacturer of infant and feminine care products, has had the largest gain, rising 216% since its trading debut on March 27. Chinese beverage and ice cream chain Mixie Group and Duality Biotherapeutics are the second and third-largest rises, with 163% and 168% increases, respectively.

Hong Kong IPO market was in a slump before investor sentiment boosted demand, and the market got filled with listings from big Chinese brands like Jiangsu Hengrui Pharmaceuticals, the largest pharmaceutical company in China, CATL, the largest producer of lithium-ion batteries for electric vehicles, and Foshan Haitian Flavouring and Food, a manufacturer of condiments.

The previous IPO boom in 2018 and 2019 was from technology companies. This time, credit goes to new consumer brands and established companies in the traditional sector, all thanks to Gen Z spending demands.

Pop Mart International Group has increased sixfold since its debut in 2020 and has produced a halo effect on consumer-focused brands.

Hitting an IPO jackpot was not an ordinary day for retail investors. Bloks, the most popular IPO this year, received 6000 times the available shares, suggesting a 0.02% success rate. Mixue had an oversubscription ratio of 5,000 times, whilst Haitian Flavoring had an oversubscription ratio of 900 times.

Almost 34 companies have raised HK$99.8 billion (US$12.7 billion) from Hong Kong’s stock market this year, making it the largest IPO site in the world in 2025.

Bonnie Chan Yiting, CEO of exchange operator Hong Kong Exchanges & Clearing, predicts that momentum will continue for the whole year. About 160 companies are in the IPO pipeline, with 20 hoping to raise at least US$1 billion. It is a euphoria for Hong Kong investors.

Kevin Liu Gang, managing director and chief offshore China and overseas strategist at CICC, claims that IPOs attract additional capital and boost the overall market during times of increased optimism. He noted that inflows from mainland China have already reached HK$700 billion this year, compared to HK$800 billion in 2024.

He stated that almost half of the IPOs historically have given good returns.

Hong Kong stocks went to month-highs in anticipation that the Federal Reserve would reduce interest rates due to a decline in global oil prices.

The Hang Seng Index increased by 0.8% to settle at 24,379.86, its highest level since March 19, while the Shanghai Composite Index saw minimal reaction.

Tencent Holdings increased by 0.3% to HK$511 and Alibaba Group Holdings by 1.7% to HK$114.60. SMIC, the largest chipmaker in China, surged 3.6% to HK$43.20.

Hong Kong stocks have appreciated after Nasdaq 100 surpassed its previous all-time high in February. Traders increased their bets on rate drop after Fed chair Jerome Powell gave a balanced speech to US lawmakers about the outlook for policy.

There was a positive moment in other Asian markets. Japan’s Nikkei 225 rose 0.2% and South Korea’s Kospi and Australia’s S&P/ASX 200 climbed 0.1%.