Interview with UBS's Shen Ge: Long-term Funds Rush to Become Cornerstone Investors in Hong Kong Stocks; Super IPOs Do Not Alter Long-Term Trends

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Author | Zhou Zhiyu

In 2025, Hong Kong stock financing reached a ten-year high, reclaiming the number one spot globally. In the first five months of 2026, financing amounted to $43 billion, up more than 50% year-on-year. More than half of the financing was from the technology sector.

At the same time, US stocks are experiencing an epic wave of technology IPOs. A common market concern is that these massive deals will siphon funds from Asian markets, with Hong Kong inevitably impacted.

Against this backdrop, Chen Ge, Co-Head of Global Investment Banking at UBS Securities, recently had a conversation with Wallstreetcn about the latest trends in Hong Kong IPOs, changes in investor structure, and other topics.

Chen Ge bluntly stated that the capital diversion from Hong Kong stocks due to US super IPOs may not be as significant as the market imagines.

Chen Ge’s view is based on the changing investor base in Hong Kong stocks. Citing data, he noted that five years ago, 30%-40% of capital in Hong Kong IPOs came from US-backed investors. This year, the proportion has dropped to about 20%, while Europe and the Middle East combined have risen to 30%-40%.

Changing capital sources is just surface level. The deeper signal is that Hong Kong stocks are undergoing a systemic shift in pricing logic.

The Hang Seng AH Premium Index gauging price gaps between the markets has been falling since February 2024, hitting an eight-year low by February 2026. The prices of Hong Kong-listed CATL, Montage Technology, and GigaDevice all surpassed their A-share counterparts. Additionally, the share of technology companies in Hong Kong IPOs jumped from 16% in 2025 to 63% so far.

Currently, Chinese assets are becoming a “universal card” in global portfolios. For international investors, discussions around Chinese assets have shifted from “whether to allocate” to “how to allocate.”

Hong Kong Stocks No Longer Discounted

For over a decade, Hong Kong stocks traded at a discount to A-shares, a consensus in China’s capital markets. Chen Ge remarked: "Previously, due to liquidity and investor structure, Hong Kong stocks usually traded at a discount to A-shares."

But in the past year or two, Hong Kong premiums are no longer exceptional. As of now, six stocks still show H-share premiums to A-shares. The Hang Seng AH Premium Index peaked above 161 on February 14, 2024, fell to 113 by this February, and hovers around 120. The discount in hard tech has completely reversed.

Chen Ge believes the key reason is the change in global investors’ valuation methods.

“Global overseas investors no longer just compare to Chinese peers—now they compare globally. If a company is globally competitive and ranks first in market share in some areas, global investors are willing to pay a premium.” Chen Ge said that for AI listings, scarcity adds to the value, as options are limited.

This change showed up this year as a series of “firsts.” Qatar Investment Authority (QIA) participated as cornerstone in Dongpeng Beverage’s “A+H” project for the first time; Abu Dhabi Investment Authority (ADIA) was cornerstone in MiniMax IPO for the first time; JPMorgan and Fidelity also acted as Hong Kong IPO cornerstone for the first time this year.

Chen Ge revealed that Montage Technology’s largest cornerstone allocation was to UBS Asset Management, second-largest to JPMorgan: “They made those decisions in Hong Kong.” This reflects two things: first, overseas long-term investors and sovereign funds are enthusiastic about Hong Kong IPOs; second, these funds have some say in pricing.

UBS research shows global actively managed funds’ allocation to Chinese stocks has rebounded from 5% in Q4 2024 to close to 7% now, with double the room left before the 2021 peak of 15%. Despite the rapid rebound over half a year, global institutions remain underallocated to Chinese assets overall. Chen Ge sees this as a source of potential incremental growth.

Behind the Pricing Reversal

Once pricing power shifts, company behavior follows.

In January, Zhipu and MiniMax both listed on the Hong Kong Exchange. In under five months, both began A-share IPO counseling.

Chen Ge said these companies are healthy and growing rapidly, with global competitiveness and scarcity supporting strong valuations and performance.

Chen Ge notes this trend has broader structural support. He said Chinese companies’ technological iteration is extremely fast: “Many now have businesses going overseas—China for Global—which will drive earnings growth.” This means a steady stream of hard tech companies will enter Hong Kong’s global pricing channel in the future.

The landscape of financing tools is also being rewritten. As of now, this year’s Hong Kong convertible bond financing volume has unusually surpassed traditional share placement and additional issuance. At April’s end, China Hongqiao issued 10.2 billion RMB of zero-coupon convertible bonds—the largest RMB-linked convertible bond ever.

These investors value not just bond coupon returns, but also the product’s embedded option value—the longer the time, the greater the value.

The investor structure for convertible bonds is changing. Chen Ge said previously 70%-80% were European dedicated convertible bond investors; “now Europe makes up half, others make up the other half,” with former stock-focused institutions and insurance funds entering too.

With extended financing tools, Hong Kong is moving from a discounted channel versus A-shares to a global platform for pricing Chinese tech assets.

Not Yet Halftime

Back to the opening question: With US super IPOs crowding in the second half year, what about Hong Kong?

Chen Ge’s answer to Wallstreetcn was clear: “Good projects attract good money, good money breeds good projects.” He said currently US funds in Hong Kong IPOs make up about 20%: “That means 80% are European, Middle Eastern, and local Asian funds. These institutions invest differently; short-term shifts won’t change overall asset allocation ratios."

In Chen Ge’s view: “Hong Kong has always been an open market—good projects bring in funds."

He further pointed out that, this year, many funds that previously invested in the Middle East and Europe are shifting toward Asia, especially China, due to multiple factors. Meanwhile, Chinese companies' rapid tech iteration and overseas expansion in AI infrastructure, semiconductor supply chains, etc., are creating persistent investment themes: “These themes and strong fundamentals are attracting global investors’ continued attention."

UBS projects Hong Kong IPO financing to reach $45-50 billion in 2026, with the Hang Seng Index expected to break 30,000 points within the year.

Chen Ge revealed that from UBS’s pipeline, at least in the next six months to a year, “whether it's activity or sector distribution, the trend will persist.”

Chen Ge remains confident about Hong Kong stocks in the second half of the year, with more concrete support.

On the funding side, global institutions' allocation to Chinese assets, though rebounding, remains well below historical highs: “This is also a future source of incremental growth.”

From southbound funds, since Q4 2024 most months saw obvious net inflows; except March, slowing briefly due to geopolitics, April and May numbers remain at historically high levels.

Additionally, Hong Kong turnover has remained at historical highs this year, and secondary market liquidity provides a foundation for active primary issuance.

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