China tech financial ecosystem matures as Hong Kong IPOs boom

Hi, this is Evelyn, writing to you from Beijing. Welcome to the latest edition of The China Connection — a succinct snapshot of what I’m seeing and hearing from local businesses.

My latest conversations with investors reveal a notable shift: China has taken note of how finance powered Silicon Valley’s rise and is following suit. Growing pains and risks aside, this could mean serious competition for the U.S.

Follow the money behind China’s latest tech boom and it leads to Hong Kong — the most globally accessible of China’s stock exchanges — which roared back to life last year.

Companies raised more funds in public listings on the Hong Kong market than on any other exchange. Now, more than 400 companies are lining up to list — and I’ve heard estimates that are way higher thanks to the exchange’s relatively new confidential listing rules.

“This [surge in Hong Kong listings] will last longer than one or two years,” Gary Lock, Hong Kong-based partner at IPO advisory King and Wood, told me on the sidelines of a venture capital forum in Hangzhou last month.

The current capital markets activity is “much, much bigger” than anything seen in the last 35 years, Lock said. Since the Iran war began two months ago, he said foreign money has flowed into Hong Kong banks, getting ready to invest in China.

More than 40 companies have listed in Hong Kong so far this year, as regulations ease — and U.S. scrutiny of investment into sensitive Chinese sectors (like defense tech) grows.

Critically, the resurgence of capital activity in Hong Kong has helped shake perceptions that it didn’t offer the same scale of trading volume and stock valuations as the U.S., said Jin Yang, chief partner at KPMG China’s Hangzhou office.

And despite reports that Beijing is making it harder for overseas-structured Chinese companies to list in Hong Kong, none of the five investors and advisors I spoke to for this piece were worried it would stop the IPO flow.

Only about 15% of the Hong Kong pipeline may face regulatory scrutiny from China, Goldman Sachs analyst Si Fu said in a report last month. She predicts Hong Kong listings will raise about $60 billion this year, nearly double the $36 billion raised in 2025.

These regulations are also eroding international investors’ competitive advantage in securing startup deals in China, said King and Wood’s Lock, as founders are incentivized to pursue domestic funding.

“Who needs SoftBank,” Lock said, when a local firm can make decisions more quickly and offer better valuations?

Puhua Capital, a major Chinese venture capital firm, does not expect a major change in foreign investment this year, founding managing partner Shen Qinhua told me.

But he expects the Hong Kong IPO momentum to persist. Shen said about 60% of Puhua’s total investments are in “hard tech” such as AI, chips and commercial aerospace.