Why do Hong Kong stock IPOs in the first quarter show such a stark contrast with both high fundraising scale and high initial loss rates?

Ask AI · What core factors do investors value most behind the high rate of post-IPO selloffs?

In the first quarter, 40 companies completed an IPO in Hong Kong, of which 23 stocks fell below their offer price

Investment Times Network, Punctuation Finance Researcher Li Lu

Who would have thought that Hangzhou Tongshifu Cultural and Creative (Group) Co., Ltd. (hereinafter “Tongshifu,” 0664.HK), dubbed the “Bubble Mart for middle-aged people,” would—while becoming the “first listed company for copper-quality cultural and creative”—also set the biggest record for a first-day post-IPO selloff in Hong Kong stocks this quarter.

On the last day of the first quarter of 2026, after nearly a year of twists and turns, Tongshifu finally began trading officially on the Hong Kong Stock Exchange. However, on its first day of listing, the company’s share price only briefly spiked for less than ten minutes after the open, then continued to fall; it ultimately closed down 49.17%, becoming this quarter’s “king of post-IPO selloff” among Hong Kong IPOs.

In fact, if we broaden the lens to the overall Hong Kong stock market, this quarter’s Hong Kong IPO market saw 40 companies (39 on the Main Board, 1 on the GEM) complete IPOs, an increase of 150% from the 16 companies in the same period last year. Of these, only 5 experienced a post-IPO selloff on the first trading day. Excluding Lantu Auto (7489.HK), which went public via an introduction listing, the first-day post-IPO selloff rate was 10.26%. Viewed against historical levels, this proportion is not particularly high. Moreover, six stocks—including Haitai Technology Group (2706.HK) and Jushizijiao (6636.HK)—all saw first-day gains of over 100%.

But if we extend the timeline, as of the close on April 2 (the Hong Kong market was closed from April 3 to April 7), among the 39 IPO new shares excluding Lantu Auto, 23 had already fallen below their offer price, making the post-IPO selloff rate as high as 58.97%. In the same period last year, the Hong Kong IPO post-IPO selloff rate was only 27.6%. Among the 23 selloff stocks, 11 had declines of more than 20%.

First-day post-IPO selloff stocks on the HKEX (%)

Source: Wind, as of March 31, 2026

The reason this situation surprised the market is that it stands in sharp contrast to the lively state of the Hong Kong IPO market in the first quarter.

Wind data shows that in the first quarter, total IPO proceeds in Hong Kong were close to HKD 110 billion, up 488.81% year over year. Not only did this far exceed the total for all of 2023 and 2024, it also set a new high since the second quarter of 2021. In terms of the fundraising pace, within just 79 days, the fundraising scale surpassed the HKD 1 trillion mark, setting a five-year high. In the same period last year, it took nearly half a year to achieve that target.

Investment Times Network and Punctuation Finance Researcher noted that behind the divergence in companies’ listing performance is uneven demand across industries. According to Wind’s industry classification, among the 40 companies listed in Hong Kong in the first quarter, 22 came from sectors such as AI, semiconductors, and new energy—accounting for 55% of the total—while their fundraising amount was HKD 8B, or 57.71% of the total.

After listing, these sector companies performed relatively strongly, forming the “bull stock” lineup for the first quarter. For example, AI chip companies Wall-Ru Technology (6082.HK), model company Zhipu (2513.HK), and MINIMAX-W (0100.HK) attracted substantial cornerstone investors and secondary-market capital thanks to their leading positions in the AI sector.

Among them, after Zhipu’s listing, its share price kept rising. On April 1, during intraday trading, it briefly climbed to HKD 938 per share—more than seven times the offer price. Its total market cap at one point exceeded HKD 400 billion. After MINIMAX-W listed, its stock price also kept climbing; its peak price briefly reached HKD 1,330 per share, becoming the highest-priced stock in Hong Kong. In the semiconductor industry, GigaDevice (3986.HK), which listed on January 13 and closed on April 2, also rose by 55.3%.

By comparison, the proportion of companies listed from the consumer and pharmaceutical industries declined somewhat. Although big consumer leaders such as Muyuan Foods (2714.HK) and Dongpeng Beverage (9980.HK), as well as biotech companies like Jingfeng Medical-B (2675.HK) and Riobio-B (6938.HK) appeared, these sectors either lacked a unique narrative or were in traditional industries, and the market’s enthusiasm was not high. As of the close on April 2, in traditional industries, UleSa Shared (2649.HK) had a post-IPO selloff of 37.1%, ZuoZheng Medical (2677.HK) had a selloff of 48.57%, and Hongxing Cold Chain (1641.HK) had a selloff of 46.67%, while Tongrentang Health and Retirement chose to postpone its listing.

It can be seen that the current Hong Kong stock market structure is shifting from the past—where it was heavily weighted toward finance, real estate, and consumer sectors—toward new-quality productive forces industries. In the current market environment, investors are scrutinizing new shares more strictly. It is no longer enough to win a premium by storytelling alone; fundamental factors and core technological competitiveness have become key pricing considerations.

Top ten biggest declines in share prices among new HKEX listings in the first quarter (HKD 8B, %)

Source: Wind, as of April 2, 2026

For the high post-IPO selloff rate, multiple Hong Kong stock research reports show that behind it is the combined result of a complex macro environment and market micro mechanisms. Several brokerages believe that the end of the Federal Reserve’s rate-cutting cycle and the warming of expectations for further rate hikes have strengthened the U.S. dollar, driving international capital out of the Hong Kong stock market and putting pressure on overall liquidity. In addition, since March, the Hang Seng Index and the Hang Seng Tech Index have been moving downward with volatility; investors’ risk appetite has cooled, and their tolerance for valuation of new shares has clearly decreased.

Yu Tao Securities senior partner Wu Buwei believes that from the supply side, the sharp increase in the number of IPOs and the fundraising size directly led to market capital being diverted. In the first quarter, several IPOs of over HKD 63.44B were issued in a concentrated manner, creating a “suction” effect—large amounts of capital were locked in the primary market, and the turnaround speed of secondary-market capital chasing new shares became faster. From the issuance side, pricing that is too high and expectations being overdrawn have become important triggers for post-IPO selloffs. The P/E ratios of some new share offerings were significantly above the industry average; after listing, valuations quickly reverted, and share prices followed down. As for market-support mechanisms, some new shares lacked support from cornerstone investors. After listing, there was no buying demand to support the stock; selling pressure was released directly, making it difficult for the share price to stabilize.

In addition, another major feature of the Hong Kong IPO market in the first quarter this year is the “A+H” dual listing model. Sixteen A-share companies landed on the Hong Kong Stock Exchange in that quarter. In terms of fundraising amounts, among the top ten IPOs, “A+H” strongly occupied seven slots, with proceeds of HKD 68.2 billion, accounting for as much as 62%.

Although the first-quarter IPO post-IPO selloff rate was relatively high, based on the number of companies queuing up to list in Hong Kong, Hong Kong stocks will still present a thriving scene in the future. According to HKEX data, as of March 31, there were 430 companies in the queue for a Hong Kong listing. Among them, 17 had already been approved and were awaiting listing, while 413 were still being processed. Among these companies, how many will be lifted high by the market?

Investment Times keywords: Tongshifu (0664.HK) | Haitai Technology Group (2706.HK) | Jushizijiao (6636.HK) | Zhipu (2513.HK) | MINIMAX-W (0100.HK) | GigaDevice (3986.HK) | Muyuan Foods (2714.HK) | Dongpeng Beverage (9980.HK) | UleSa Shared (2649.HK) | ZuoZheng Medical (2677.HK) | Hongxing Cold Chain (1641.HK)

Author statement: Personal views are for reference only