- Goldman Sachs' latest report pointed out that after reclaiming the top position in the global equity financing market in 2025, Hong Kong will see a significant acceleration in initial public offerings (IPOs) in 2026, with expected total IPO fundraising reaching $60 billion for the year.
- Issuance data from the beginning of the year shows that 40 companies have successfully gone public, raising a total of $14 billion, representing a substantial increase of 488% year-on-year. Approximately 400 active listing applications highlight the strong financing demand from enterprises.
- Boosted by expectations of higher activity in the primary market, the Hong Kong Stock Exchange (0388:HK) saw a mid-day rise of 0.83%. Analytical models indicate that the current stock of capital and incremental liquidity in the market are sufficient to accommodate the anticipated total annual equity supply of up to $110 billion.
Structural Shift of Global Equity Financing Eastward
Goldman's latest capital market outlook report provides detailed data supporting the recovery trajectory of Hong Kong as an offshore financial center. Following a phase of macro-cycle valuation reassessment, Hong Kong successfully restored its leading position in the global equity financing sector in 2025. Entering 2026, this recovery process is evolving into a phase of accelerated expansion. The report estimates that the total annual equity supply will reach $110 billion, which includes $60 billion from new shares and $50 billion from post-IPO secondary market refinancing. This financing structure, emphasizing both primary and secondary markets, indicates that the Hong Kong market not only attracts new economy companies with its initial pricing capabilities but also offers deep, long-term liquidity for continuous capital supplementation to already listed companies.
Active Applications ReflLect Corporate Financing Intentions
The remarkable 488% year-on-year growth in fundraising to date is a key synchronizing indicator of the substantial market sentiment recovery. The fundraising of $14 billion by 40 newly listed companies suggests an expanding trend in average IPO financing size, often implying the return of more medium to large-scale targets. A more forward-looking indicator is the approximately 400 active applications currently awaiting approval. This abundant project reserve not only provides ample capacity for the year's regular new share issuances but also reflects that real economy companies in the Asia-Pacific region, particularly in tech innovation and consumer recovery sectors, still view Hong Kong as the top gateway to reach global institutional investors. If the review cycle remains smooth, this reserve of projects will convert into substantial listing transaction fees and underwriting commissions.
Abundant Liquidity and Capital Absorption Capacity
In response to the potential capital drain effect of a massive $110 billion annual equity supply, Goldman's analysis offers a relatively optimistic assessment of liquidity. The report highlights that the current internal capital pool and anticipated inflows are sufficient to fully absorb the newly issued scale. The underlying logic of this judgment is that with global risk-free rate shifts, significant offshore funds previously anchored in fixed income products or watching accounts are now seeking equity assets with profit growth elasticity. The previously suppressed valuation levels of the Hong Kong market now provide a valuation cushion for absorbing large IPOs. As long as new issuers can offer capital returns that meet institutional expectations, market liquidity will not be a bottleneck for issuance scale.
Valuation Recovery Logic of HKEX and Mainland Brokers
The comprehensive resurgence of primary market activity is systematically reconstructing the balance sheets of capital market intermediary institutions. Hong Kong Exchanges and Clearing Limited (0388:HK), as a core trading infrastructure provider, will directly benefit from the increase in listing fees and subsequent expansion of trading volumes, with its 0.83% stock price increase initially reflecting this profit revision expectation. Meanwhile, Chinese mainland brokers with extensive overseas business layouts are set to encounter significant performance elasticity. In the wave of mainland Chinese companies financing abroad, these brokers, equipped with a deep understanding of mainland enterprises' fundamentals and an established distribution network in offshore markets, are poised to secure more underwriting shares in global investment banking competition. Should IPO activity sustain throughout the year, related financial institutions' price-to-earnings ratios are likely to experience systemic elevation.
The strong capital attraction displayed by Hong Kong's capital market at the start of 2026 denotes that the regional primary market ecosystem is undergoing a profound bounce-back from the bottom. Goldman Sachs' latest assessment reaffirms Hong Kong's historical position reclaim in global equity financing by 2025 and provides an optimistic guide to a $60 billion issuance scale this year. In the backdrop of 40 enterprises raising $14 billion from the beginning of the year to now, the vast project reserve is converting into actual revenue streams for investment banks and brokers. This trend not only reestablishes the funding function of the Hong Kong market but also systematically repairs the profit model of the entire cross-border capital intermediation industry.
Competitive Landscape
With the expectation of $60 billion in new stock issuance, the competitive landscape of Hong Kong's investment banking sector is undergoing a significant structural evolution. Traditionally dominated by foreign Wall Street banks, the large IPO underwriting market faces a robust challenge from leading mainland Chinese brokers with deep local resources. Given that a considerable portion of the approximately 400 queued applications originates from mainland China's hard technology, advanced manufacturing, and biopharmaceutical companies, mainland brokers, with their localized due diligence capabilities and precise policy guidance, show a distinct alpha advantage in acquiring sponsoring qualifications. Meanwhile, foreign banks continue to play an irreplaceable role in introducing global long-term sovereign funds and dollar sovereign wealth funds as cornerstone investors. Should this model of joint underwriting by Chinese and foreign investment banks become the norm, it will effectively smooth out individual institutional underwriting risks, reshaping the competitive ecology of the investment banking industry.
Revenue Restructuring of Brokerage Investment Banking
The recovery of Hong Kong's IPO market directly drives the revenue restructuring of related brokerage investment banking lines. During past quarters' downturns, brokers' revenue structures were highly reliant on wealth management and fixed income proprietary trading. With the thawing of the primary market, traditional sponsorship fees, underwriting commissions, and financial advisory fees will return as the core engines driving investment banking business growth. More importantly, the high expectation of $50 billion in post-IPO secondary market financing implies the frequent use of refinancing tools such as placements, rights issues, and convertible bond issuances. This will significantly activate brokers' capital intermediation businesses, including providing margin financing services to participating IPO clients and institutional investors. The dual driving forces of interest and fee income will notably enhance the asset return rate (ROA) of brokers' overseas branches.
Conversion Rate of Issuance Reserve and Review Cycle
The 400 active applications mentioned in Goldman's report form a substantial asset reserve pool for the Hong Kong market. However, from the practical logic of the industry chain operation, the conversion rate from reserve scale to actual issuance scale highly depends on the efficiency of regulatory review and the cooperation of the macro market window. In this process, the institutional supply of the Hong Kong Stock Exchange (0388:HK) and the Hong Kong Securities and Futures Commission is particularly crucial. Optimized listing rules for specialized technology companies (Chapter 18C) and unprofitable biotech companies (Chapter 18A) are accelerating the clearance pace for companies in these fields. For investment banks and issuers, precisely selecting the time window for roadshows and book-building in a macro year where liquidity might marginally fluctuate will directly determine the final pricing range of the issuance and the multiple of oversubscription.
Secondary Market Liquidity's Support to Primary Issuance
The prosperity of the primary market can never divorce from the support of secondary market liquidity. Goldman's emphasis on the sufficiency of existing capital to absorb new issuances reveals a beneficial cyclic mechanism unfolding between Hong Kong's primary and secondary markets. When new listing enterprises can offer reasonable earning effects early in their listing phase, it will attract more passive capitals and actively managed funds from outside the system to enter and allocate. This newly injected liquidity, while boosting index turnover, also provides ample liquidity margins for the subsequent $50 billion secondary market financing. Should the Hang Seng Index and related technology indexes maintain a robust valuation anchor, concerns from the corporate side about valuation discounts delaying listings will be entirely dispelled, thereby facilitating the efficient monetization of investment bank project pipelines.
