International Capital Enthusiastic About A+H Placements: Hong Kong Stocks Signal a New Market Trend; Leading Companies Favored and Emphasis on Pricing Power

Cailian Press reports on August 13 that cornerstone investors have traditionally served as opinion leaders in Hong Kong’s equity market. Against this year’s wave of A+H listings, the composition and allocation strategies of these investors have become especially noteworthy to market participants.

Wind data indicate that ten A-share issuers have completed both A-share and H-share listings in Hong Kong this year, raising a total of HKD 88.624 billion. This contrasts sharply with zero dual listings during the same period last year, marking not only a significant uptick in quantity but also a record fundraising scale for A-share companies in Hong Kong. In this context, the identity of the cornerstone investors underpinning these listings has drawn close scrutiny, underscoring the growing endorsement of Hong Kong by international capital.

A senior executive at a Hong Kong brokerage told reporters that industry leaders have excelled at attracting global cornerstone backers. Contemporary Amperex Technology Co. Limited (CATL) secured subscriptions from 23 top-tier international investors—including the Kuwait Investment Authority—with international placements representing 92.5 percent of its offering. Hengrui Medicine drew cornerstone commitments from institutions such as Invesco, UBS Asset Management and Hillhouse Capital totaling more than 40 percent of its issuance. By contrast, non-leading issuers saw markedly lower participation from overseas investors.

According to the brokerage executive, only market-leading issuers can truly command the attention of international cornerstone investors. For smaller players, securing cornerstone support often goes beyond confidence in fundamentals and involves more nuanced strategic or reciprocal considerations.

This year’s A+H issuers—Fengyan Technology, Lens Technology, Anjoy Foods, Sanhua Intelligent Controls, Haitian Flavoring & Food, Jihong Packaging, Hengrui Medicine, Contemporary Amperex Technology Co. Limited, Junda Corporation and Chifeng Gold—exhibit a clear pattern in cornerstone participation. Market leaders with robust industry positions and stable profit profiles have attracted substantially higher levels of cornerstone interest by instilling greater confidence among institutional subscribers.

CATL, which completed the largest IPO globally this year, stood out by attracting 23 cornerstone participants spanning energy conglomerates, sovereign funds and leading asset managers. Their combined subscriptions reached HKD 20.371 billion, equivalent to 57.13 percent of the total global offering. Sinopec (Hong Kong) and the Kuwait Investment Authority each contributed HKD 3.876 billion, representing the largest individual stakes.

Similarly, Sanhua Intelligent Controls, another sector frontrunner, secured support from over ten cornerstone investors, further highlighting the magnetic appeal of top-tier issuers. In contrast, Jihong Packaging, Junda Corporation and Chifeng Gold saw only a handful of cornerstone commitments, reflecting market caution regarding their growth visibility and operational stability.

An additional trend is the participation of strategic industrial investors with direct business ties to the issuers. For example, Sanhua Intelligent Controls invested as a cornerstone backer in Fengyan Technology after the two companies signed a strategic cooperation framework earlier this year. Such investments underscore the role of underlying business synergies in cornerstone allocations.
International investors’ footprint in Hong Kong IPOs is most pronounced among Hengrui Medicine, Lens Technology, Jihong Packaging, CATL and Sanhua Intelligent Controls. Beyond the allure of market leadership, these investors are targeting sectors such as technology and biopharmaceuticals that combine growth potential with relative predictability.

Their decision framework typically prioritizes an issuer’s industry standing and long-term market outlook as primary indicators of expected returns, followed by an assessment of cyclical risk exposure to ensure a favorable risk-reward profile.

Market observers note that the prospect of post-IPO price declines also influences foreign participation. Among the ten dual-listed companies, Anjoy Foods, Sanhua Intelligent Controls and Junda Corporation all experienced share-price drops after listing. Notably, Anjoy Foods and Junda Corporation had relatively low cornerstone involvement, suggesting that international investors anticipated these risks and adopted a cautious stance.

Overall, attracting active international cornerstone participation requires a multifaceted approach. While leading issuers naturally draw global support, those smaller issuers that do secure cornerstone backers often do so through negotiated incentives or commitments to future cooperation, enabling investors to access new markets and resources through their participation. Looking ahead, Hong Kong’s appeal to international investors shows no signs of waning. The momentum of A-share issuers listing H-shares remains strong, and sustained southbound capital inflows are reshaping valuation dynamics across A+H securities.

Of the 251 IPOs filed this year, 54 involve existing A-share companies—21.5 percent of the total—with another 40 A-share issuers publicly announcing H-share issuance plans. According to a CICC research note, southbound trading ratios have climbed from approximately 20 percent in February 2024 to nearly 35 percent today, compressing the A+H premium to about 125 percent—the lowest level in recent memory. In some cases, A-shares now trade at a wider discount to their Hong Kong counterparts, a rare phenomenon. For instance, CATL and Hengrui Medicine currently exhibit A-share discounts of 31 percent and 15 percent, respectively, relative to their H-shares.

International capital allocation trends further attest to Hong Kong’s continued magnetism. A Goldman Sachs report estimates that roughly two-thirds of recent Hong Kong IPO subscriptions have come from foreign investors, with the remaining third from local participants. Long-term global investors—such as pension and sovereign wealth funds—are increasing their involvement, while a gradual reallocation away from U.S. bonds and equities is making well-valued Hong Kong listings with robust growth prospects ever more compelling for international portfolios.