Hong Kong retains IPO crown as half of 179 new listings decline

Hong Kong ranked first globally in IPO fundraising last year, yet half of 179 listings since January have seen their share prices decline over the past three months, according to Wind data.

"Share price performance is influenced by various factors," HKEX said in a statement to CNBC.

The divergence is stark when compared with global benchmarks. The Hang Seng Index recorded a moderate decline over the same period, while the FTSE Renaissance Global IPO Index rose more than 10 percent. KPMG data shows Hong Kong surpassed the New York Stock Exchange and Nasdaq in IPO fundraising last year, with more than 600 companies currently waiting to list on HKEX.

The performance gap is even more pronounced among stocks eligible under the Shanghai-Shenzhen-Hong Kong Stock Connect scheme, which allows mainland Chinese investors to trade directly. Of the 33 Hong Kong-listed stocks added to Stock Connect on March 9, more than half saw their share prices more than double between their IPO and the last trading day before inclusion. Eight of those stocks, including AI startup Deepexi Tech, surged more than 300 percent during that period. All eight have since fallen at least 10 percent after inclusion. Deepexi Tech has dropped about 51 percent.

Beijing authorities have taken note of the situation. Mainland state media Securities Times on May 29 highlighted concerns over certain Hong Kong IPOs that experienced sharp surges followed by steep declines. Market participants are now watching the performance of Knowledge Atlas, which was included in Southbound trading today, and Minimax-W, which may be added to the scheme as early as this summer.

The post-listing volatility raises questions about pricing discipline in Hong Kong's IPO market as it competes with US exchanges for global listings. Investors will watch whether regulatory scrutiny from Beijing leads to tighter listing standards or changes to the Stock Connect inclusion process.

This article is for informational purposes only and does not constitute investment advice.