Chinese firms pull back from listing in the U.S. as Hong Kong IPOs see a surge

Major Pivot in Chinese IPO Strategy

Chinese companies are dramatically shifting their listing preferences from US exchanges to Hong Kong markets, creating one of the most significant capital market realignments in recent years. According to recent financial analysis, this strategic pivot reflects growing geopolitical tensions and regulatory pressures that have reshaped the global IPO landscape. The transformation has been particularly striking in 2024, with Chinese IPOs in the US slumping 4% year-on-year in deal value, raising just $875.7 million across 23 deals.

The current figures represent a stunning 93% decline from the $13 billion raised across 39 listings during the same period in 2021, according to data provider Dealogic. This dramatic reversal comes as companies increasingly view Hong Kong as a safer, more predictable listing destination. The shift mirrors broader trends in global supply chain realignment as companies seek stability amid geopolitical uncertainty.

Regulatory Watershed: The Didi Global Effect

The turning point in Chinese overseas listings came with ride-hailing operator Didi Global’s controversial New York IPO in 2021. Despite Beijing’s objections, Didi pressed ahead with its US listing plans, prompting Chinese authorities to intensify supervision of domestic firms seeking overseas listings. “Chinese listings in the U.S. have pretty much become non-existent since Didi Global’s ill-fated IPO in the U.S.,” said Perris Lee, head of equity capital market for APAC at Mergermarket.

Less than six months after its public debut, Didi began its delisting process, sending shockwaves through financial markets and establishing a new regulatory paradigm. The aftermath has seen Beijing assert greater control over where Chinese companies can list, particularly for firms operating in strategic industries. This regulatory environment has created challenges similar to those faced in emerging technology sectors where government oversight is increasing globally.

Hong Kong’s Meteoric Rise as Listing Hub

While US listings have faltered, Hong Kong has experienced an extraordinary surge in Chinese IPO activity. Dealogic data shows Chinese IPOs in Hong Kong have skyrocketed 164% year-on-year, raising $18.4 billion from 56 listings in 2024. The Asian financial hub is on track to become the world’s largest listing destination this year, boosted by several blockbuster deals including Contemporary Amperex Technology’s $5.3 billion IPO and Zijin Gold’s $3.2 billion listing.

Eugene Hsiao, head of China equity strategy at Macquarie, attributes Hong Kong’s appeal to multiple factors: “Interest in Hong Kong is fueled by a confluence of factors, including better fundraising conditions following Beijing’s supportive measures introduced in September last year, and the boom in technology and artificial intelligence sectors.” This growth trajectory reflects the kind of strategic positioning that successful companies maintain in evolving market conditions.

Regulatory Innovations and Market Optimism

Hong Kong regulators have actively cultivated this listing boom through strategic initiatives. In May, they unveiled the “Technology Enterprises Channel” to facilitate IPO approvals for specialist technology and biotech companies, particularly those already listed on mainland exchanges. This targeted approach has created a welcoming environment for innovative companies facing the kind of regulatory scrutiny that affects technology hardware manufacturers in global markets.

Professional services firm PwC projects Hong Kong will see up to 100 IPOs this year, with total fundraising exceeding $25.5 billion. The optimism extends to major financial institutions, with J.P. Morgan’s Asia Pacific equity capital markets head Peihao Huang noting: “We expect a very busy Q4 and first-half 2026 with a super strong pipeline as Chinese companies listed in the mainland accelerate their process for a Hong Kong dual listing.”

Geopolitical Pressures and Delisting Risks

The shift to Hong Kong is also driven by growing delisting risks for Chinese companies in the United States. US lawmakers have repeatedly called for the delisting of Chinese firms from American exchanges, citing national security concerns. In June, the US Securities and Exchange Commission specifically targeted China as it sought to raise disclosure requirements for companies listed on US exchanges.

This regulatory pressure has created an environment where companies must navigate complex considerations similar to those highlighted in merger and acquisition preparedness analyses. The heightened scrutiny has particularly affected companies like lidar sensor maker Hesai Group, which was added to a Pentagon blacklist of companies linked to China’s military last year. Hesai raised $535 million in its Hong Kong listing last month, becoming the latest US-listed Chinese firm to pursue such a move in 2024.

Beijing’s Firm Control Over Listing Destinations

Chinese authorities have made it increasingly clear that they prefer domestic companies to list either on mainland exchanges or in Hong Kong. The government has maintained tight control over capital outflows, including stock offerings overseas. This preference was dramatically demonstrated in 2020 when Beijing halted Ant Group’s planned Hong Kong and Shanghai listings less than 48 hours before what would have been the world’s largest IPO.

“Shein’s failed attempt to get listed in the U.S. has only further underscored Beijing’s regulatory preferences on where its companies should get listed,” Lee added. The online fast-fashion retailer with Chinese roots ultimately shelved its New York listing plans, reportedly shifting focus to Hong Kong after its proposed London IPO also failed to secure Beijing’s approval. This centralized control reflects the kind of strategic oversight that influential market analysts often discuss when examining emerging market dynamics.

Changing Profile of US Listings

The character of Chinese listings in the US has transformed significantly. According to a March report from the US-China Economic Security Review Commission, more than 280 Chinese companies are listed on major US stock exchanges including Nasdaq and the New York Stock Exchange with a total market capitalization of $1.1 trillion. However, small-cap companies now dominate China’s US listing landscape, with blockbuster, multibillion-dollar IPOs completely absent from US exchanges.

The average Chinese IPO in 2024 raised just $50 million, down from over $300 million in 2021. This shift toward smaller offerings reflects both regulatory constraints and changing market dynamics. Nasdaq has responded by stepping up its scrutiny of small IPOs from China since last year, proposing additional requirements in September that will make it harder for smaller Chinese companies to list in New York.

Alternative Pathways and Future Outlook

Steve Markscheid, managing partner of Aerion Capital, notes that the heightened requirements “certainly raise the bar” for Chinese companies seeking US listings. This could push more firms toward alternative pathways such as SPACs or reverse takeovers, where a private company merges with a public company to achieve listing status without a traditional IPO.

Meanwhile, the momentum in Hong Kong shows no signs of slowing. Hotel chain Atour Lifestyle Holdings and robotaxi firm Pony AI are both weighing listings in Hong Kong this year, with the latter obtaining approval from Chinese securities regulators this week. Even established US-listed Chinese companies like Temu parent PDD Holding are making strategic moves, switching to Hong Kong-based auditors in what many interpret as preparation for secondary listings.

As Macquarie’s Hsiao observes, geopolitical tensions including US lawmakers’ calls to tighten restrictions on Chinese firms listed stateside have helped Hong Kong position itself as the primary substitute for offshore fundraising for China-based companies. This fundamental realignment appears set to continue shaping global capital markets for the foreseeable future.