Hong Kong to let big funds secure bigger proportions of listings

[HONG KONG] Hong Kong will let big funds secure a bigger proportion of shares offered for new listings after some companies that went public sparked a retail frenzy in the city.

Starting next week, the maximum percentage of shares that can be allocated to retail investors will be lowered to 35 per cent, down from 50 per cent currently, according to a Hong Kong Exchanges & Clearing statement on Friday (Aug 1). The exchange had initially proposed cutting it to 20 per cent.

New listings have fuelled Hong Kong’s revival this year, driven by a slew of Chinese companies adding an extra listing in the city, including battery-giant Contemporary Amperex Technology Ltd’s blockbuster deal – the biggest of its kind in 2025 globally. That helped the city reclaim its standing as the world’s second-largest market for share sales for the first time since 2012, reversing a yearslong slump following the Covid-19 pandemic.

The change aims to minimise the risk of initial public offerings being overpriced during bookbuilding, which can result in a greater risk of a price slump after listing, the exchange said in a December paper.

The retail frenzy around the likes of Mixue Group’s Hong Kong debut was so intense that the securities regulator put a cap on margin loans and launched a review of the brokers that were most active in the deals.

New listings that have been highly sought after by retail investors have triggered a so-called clawback mechanism that would increase the number of shares available to them by taking away stock that had been allocated to institutional investors. BLOOMBERG