Hong Kong's equity issuance market is rebounding rapidly on the back of an artificial intelligence (AI) investment boom. As Chinese AI supply chain companies turn to Hong Kong one after another to raise funds for capacity expansion, analysts say the city is reemerging as a key capital-raising hub in Asia.
According to Bloomberg on Saturday, fundraising in Hong Kong's equity issuance market in the first half of this year totaled about $44 billion, combining initial public offerings (IPOs), follow-on offerings and block deals. That marks a 29% increase from the same period last year and is the highest in five years.
Hong Kong accounted for about 36% of the $122 billion raised across the entire Asia-Pacific region, the largest share. The strong demand for large-scale fundraising held up even as the Hang Seng Index fell nearly 12% this year, alongside concerns over possible tighter listing regulations from Chinese authorities and inflation worries stemming from war in the Middle East.
Leading the market recovery are AI supply chain companies from mainland China. The world's largest battery maker CATL and printed circuit board (PCB) maker Shennan Circuits led fundraising worth billions of dollars. Analysts say that as investment in new industries such as AI servers, electric vehicles and data centers expands, related companies are raising funds in the Hong Kong market to expand production facilities.
The momentum is expected to continue in the second half. Big-name candidates including Kunlunxin, Baidu's AI chip subsidiary, optical communication module maker Zhongji Innolight, and China's largest electronics contract manufacturer Luxshare Precision are preparing to list in Hong Kong. Companies already listed are also actively moving to raise additional funds. According to sources, CATL recently raised an additional $5 billion through a share placement following its listing last year. Zhipu AI, an AI model developer that listed in January this year, is also considering raising several billion dollars in additional funds as early as next month.
James Wang, head of equity capital markets for Asia-Pacific at Goldman Sachs, said, "Capital-raising activity across Greater China will accelerate further in the second half of this year," adding, "The AI ecosystem is one of the most important drivers leading capital formation."
For Hong Kong, the fundraising boom is seen as an opportunity to restore its status as an international financial hub. The Hong Kong IPO market suffered from sluggish trading for years but has shown signs of recovery since the second quarter of last year, absorbing large deals. JPMorgan said, "The Hong Kong market has proven its capacity to absorb large deals, and market confidence is recovering further."
