Hong Kong and India drive banner year for equity capital markets

BANKERS in Asia are readying for the final stretch of a standout year for deals in equity capital markets, led by two powerhouses: Hong Kong and India.

Hong Kong has benefited from Chinese companies rushing to raise money to fund their expansion, tapping renewed investor appetite for the world’s second-largest economy. Highlights include Zijin Gold International’s US$3.2 billion initial public offering (IPO), which has drawn the likes of BlackRock, Fidelity International and Singapore sovereign wealth fund GIC.

“The third quarter has been the busiest period we’ve seen in years,” said Cathy Zhang, head of Asia Pacific ECM at Morgan Stanley. Based on conversations with investors and the deals pipeline, “Hong Kong’s capital market will continue to be active next year,” she said. 

Share sales in Hong Kong – comprising IPOs, primary placements and block trades – have raised almost US$23 billion since Jul 1, making it the best quarter in more than four years, data compiled by Bloomberg show. The three-month haul already exceeds the proceeds for all of 2024.

Kuwait Investment Authority offloaded a US$3.4 billion stake in insurer AIA Group in July, while Chinese companies such as Alibaba Group Holding and China Pacific Insurance (Group) turned to the convertible bond market, which could be in line for a record year.

Helping drive the blistering pace of activity is the benchmark Hang Seng Index’s more than 30 per cent gain this year, thanks to improved sentiment on China, making it one of the world’s best-performing major markets.

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One particularly buoyant sector is healthcare, where companies have raised over US$5 billion from IPOs and other share sales in the third quarter. That’s the most since the heydays of 2021. 

IPOs to return

While most of the listings in Hong Kong have been from companies already traded in mainland China, the city is starting to see a return of firms selling shares for the first time. One of those is Zijin Gold, albeit with a slight delay courtesy of Super Typhoon Ragasa – it’s now due to start trading on Sep 30. 

These debuts are a good test of the market’s strength, given that investors are less familiar with them. 

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Shares of Chery Automobile – China’s biggest car exporter – rose as much as 14 per cent on their first day of trading on Sep 25 before paring the gain to 3.8 per cent at the close. Chery raised US$1.2 billion in its IPO, the largest debut of its kind since Chinese electric-vehicle battery maker CALB’s float three years ago.

“The real test will come next year – whether the market can achieve true price discovery and bridge the gap between buyers and sellers to get deals done,” said James Wang, head of ECM for Asia ex-Japan at Goldman Sachs Group. 

Artificial intelligence is all the rage, with several Chinese firms looking to go public, including MiniMax, one of the country’s so-called AI Dragons or Tigers, and OpenAI challenger Zhipu.

“Next year will be a bumper year for AI-related IPOs in Hong Kong,” Wang said, adding that robotics and renewable energy will also be busy sectors.

After a slow start to the year, IPOs in India fetched over US$6 billion in the third quarter, more than the first six months of 2025 combined, data compiled by Bloomberg show.

Rent-a-service company Urban was India’s most oversubscribed IPO of the year, as well as its best major debut. The shares rallied 62 per cent on their first day.

Strong inflows from domestic mutual funds have supported Indian equities as foreign investors pulled money out on concerns about slowing corporate profit growth and lofty valuations. The Sensex index is up 3.5 per cent this year in Mumbai. 

With a long list of companies lining up to go public, bankers are betting that the world’s most populous nation will build on last year’s record IPO haul, even as investors push down valuations.

“There’s a massive pipeline,” said Harish Raman, head of ECM execution and solutions for APAC at Citigroup. “It’s more of a question of demand than supply – there’s endless supply.”

Eyewear company Lenskart Solutions, e-commerce platform Meesho, Walmart-owned PhonePe and LG Electronics’ Indian unit are among companies that may list this year, and there’s the potential US$6 billion or more IPO of India’s largest wireless carrier Reliance Jio in 2026.