Hong Kong IPO "boom," Morgan Stanley and Goldman Sachs remain the biggest winners.

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Although the influence of Chinese securities firms in their home market is steadily increasing, Wall Street investment banks led by Morgan Stanley and Goldman Sachs remain the biggest winners in this year's wave of strong recovery in Hong Kong's equity capital markets, consolidating their dominance on the trading stage of Asia's financial hub.

With a large number of Chinese companies raising funds in Hong Kong and overseas investors' renewed interest in Chinese stocks, the Hong Kong capital market is experiencing a significant recovery. According to data from Refinitiv LSEG, so far this year, the total value of equity capital market (ECM) activity in Hong Kong-listed companies has reached $73.1 billion, a surge of 232% compared to the same period in 2024, and funds raised from initial public offerings (IPOs) are set to reach a four-year high.

In this capital feast, American investment banks took the largest share. According to Bloomberg data, as of the end of November this year, Morgan Stanley helped companies raise $11.6 billion through equity issuance deals in Hong Kong, ranking first. Goldman Sachs ranked second with $7.4 billion, followed by Chinese banks CITIC, CICC, and Swiss bank UBS.

This wave of deal-making highlights the market's pragmatic mindset: despite geopolitical risks being an unavoidable background noise for investors, the strong appeal of international capital to major Chinese enterprises and their need to access global investors still make Wall Street firms indispensable.

Wall Street Giants Lead the Pack

Data shows that Western banks have held an overwhelming advantage in Hong Kong equity deals this year. Saurabh Dinakar, Head of Global Capital Markets for Asia Pacific at Morgan Stanley, said, “We're seeing a pretty robust shift in equity issuance by Chinese companies in Hong Kong.”

The Bloomberg data covers both IPOs and follow-on stock offerings by already-listed companies. This year's major deals include a $4.6 billion share placement by CATL, the world's largest battery maker, as well as an IPO by mining company Zijin Gold. The successful execution of these deals further cemented the top positions of Morgan Stanley and Goldman Sachs in the underwriting league table.

What Is the Moat of Foreign Banks?

Analysts point out that despite the rise of Chinese firms, Wall Street banks with global brands remain the top choice for large deals and Chinese companies seeking international capital.

Alicia García Herrero, Chief Economist for APAC at Natixis, said: “For mega-deals, you still need these global brands.” She added: “The reason they still require Goldman Sachs or Morgan Stanley is because they want to attract foreign investment, especially for large deals like BYD.” In March this year, Chinese electric vehicle and battery manufacturer BYD completed a $5.6 billion share sale.

The “Home Field Advantage” of Chinese Securities Firms

Meanwhile, Chinese banks are aggressively expanding in Hong Kong, aiming to gain a larger share in Hong Kong's market, where advisory fees are higher than on the mainland. Rowena Chang, a director at rating agency Fitch, said: “We are seeing Chinese securities companies making a massive push in Hong Kong.”

Local advantages make Chinese brokers stand out in certain areas. Data shows that in terms of IPO underwriting volume alone, CICC, Citic Securities, and Huatai Securities have ranked among the leaders in Hong Kong's market this year. Notably, leading mainland investment bank CICC recently announced plans to acquire two smaller brokerages.

Jean Thio, a partner in Clifford Chance's capital markets team, explained that these brokerages have built strong relationships with Chinese companies already listed on the mainland. More importantly, they have smooth communication channels with mainland regulators such as the China Securities Regulatory Commission (CSRC), which is crucial for mainland companies looking to list overseas, as regulatory approval must be obtained in advance.

Jean Thio added, “Communication with the CSRC is key, and this is exactly what Chinese banks are good at.” A common cooperation model is for companies to hire both a U.S. investment bank and a local securities firm as joint sponsors.

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