CITIC SEC Hong Kong IPO Outlook for 2026: IPO is expected to remain robust, focusing on selective projects for new listings.

CITIC SEC released a research report stating that the Hong Kong IPO market will be hot in 2025 with high-quality projects. Based on this, the market has shown significant profit-making effects, and investors are enthusiastic about new offerings. Looking towards 2026, with a rich IPO project pipeline and relatively guaranteed project quality, the Hong Kong IPO market is expected to remain hot. It is recommended that anchor investors and cornerstone investors should still select projects based on their own endowments and risk preferences. Key points from CITIC SEC are as follows: The Hong Kong IPO market in 2025 is hot, with characteristics of large market capitalization and a significant increase in the number of A to H listings. In 2025, there were a total of 116 Hong Kong IPO projects, raising a total of HK$285.9 billion (excluding introduction listings), making it the hottest year since 2022. The projects have mainly been in the technology, consumer, and healthcare industries in recent years. Additionally, the projects have shown characteristics of large market capitalization, with the proportion of IPO companies with market capitalization exceeding HK$10 billion increasing from around 30% in 2020-2024 to 56% in 2025, indicating higher project quality. Furthermore, there were 19 A to H listings in 2025, accounting for 16.4%, the highest in nearly a decade and significantly higher than in previous years. The profit-making effect in the market is significant, with investors showing high enthusiasm for new offerings, and mainland institutions actively participating in cornerstone investments in Hong Kong stocks. In 2025, the average and median subscription multiples for offline subscriptions were 8.7 times and 4.5 times, respectively, while for online subscriptions, they were 1654.9 times and 312.9 times, respectively. The subscription multiples were at their historical highs, indicating high enthusiasm among institutional investors and individual investors for new offerings. The rate of first-day losses for Hong Kong IPOs in 2025 was only 27.6%, the lowest since 2018. In terms of first-day returns, the median return in 2025 was 9.6%, with a mean return of 36.6%, both the highest since 2018. It is worth noting that in the past, cornerstone investments in Hong Kong IPOs were mainly made by foreign investors, including overseas sovereign funds. However, in 2025, various domestic institutions, including public funds, insurance funds, and financial subsidiaries, actively participated in cornerstone investments in Hong Kong stocks. In terms of investment strategy, both anchor and cornerstone investors should focus on selecting projects, paying attention to the lower volatility of A to H projects. The first-day returns and cornerstone investment returns of Hong Kong IPOs are strongly correlated with the performance of the secondary market. However, there are significant differences in returns among different projects in the same year. Projects that are in the top 20% in terms of returns have been consistently lucrative, while those in the bottom 20% have had negative returns. Therefore, both anchor and cornerstone investors should focus on selecting projects, with market timing playing a certain auxiliary role in equity markets. Anchor investors should focus on observing investor sentiment, while cornerstone investors should focus on in-depth research on individual stocks. In addition, A to H projects have lower volatility in terms of first-day returns and cornerstone investment returns, for two reasons: 1) the projects have corresponding A-share stocks as valuation anchors; 2) the companies have a longer operating history, resulting in stronger fundamental certainty. Outlook for 2026 and investment recommendations: Hong Kong IPOs are expected to remain hot, and anchor and cornerstone investors should both select projects based on their own endowments and risk preferences. Based on Choice data statistics, there are currently 357 companies in the pipeline for listing on the Hong Kong Stock Exchange, with 105 A to H projects. With a rich project pipeline and relatively guaranteed project quality, the Hong Kong IPO market is expected to remain hot in 2026. Both anchor and cornerstone investors should select projects based on their own endowments and risk preferences. In terms of endowments, investors can select projects in areas where they have expertise in research and deeper investment sources. In terms of risk preferences, investors can consider using A to H projects as their core positions and increasing their returns on other projects. Risk factors: Major adjustments in IPO policies in Hong Kong and mainland China; market volatility and risks of unforeseen events; past performance does not guarantee future results.