DeepSeek’s AI Breakthrough Fuels Hong Kong IPO Market Surge

The Hong Kong initial public offering (IPO) market has reportedly shown impressive momentum in the first quarter of 2025, with six IPOs raising over HK$1 billion (US$128.52 million), a significant increase from just one in the same period last year.

This strong performance builds up on the rise of notable IPOs completed in late 2024, as highlighted in a report by global accounting firm KPMG, and is further fueled by the rising prominence of DeepSeek, which has shifted global investor focus toward Chinese mainland technology companies.

As international investors return to Hong Kong following news of DeepSeek’s AI breakthrough in late January, Chinese companies are seizing the opportunity to pursue public listings in the city.

George Chan, global IPO leader at EY said, “Everyone is working so perfectly together. IPO candidates, the investor and the regulators, all these three parties are working so perfectly at this moment to actually cultivate a healthy Hong Kong IPO market.”

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Hong Kong IPO Market

Hong Kong recorded 15 IPOs in the first quarter of 2025, raising HK 17.7 billion (US 2.27 billion), marking its strongest start to a year since 2021. Six of these IPOs surpassed HK 1 billion (US 128.51 million) in proceeds, a significant increase from just one in the previous year.

Despite persistent concerns over US trade tensions, this surge of enthusiasm marks the first such wave in over three years. For early-stage start-up investors, IPOs remain a lucrative exit strategy to reap returns.

Beijing’s supportive policies and reforms to stock exchange regulations have revitalized listings, attracting major enterprises such as CATL and Hengrui Pharmaceuticals to the market.

Despite this momentum, Hong Kong’s IPO market remains below its 2021 peak, when 32 offerings generated HK 132.7 (US 17.05 billion). Analysts caution that ongoing regulatory shifts and geopolitical risks could hinder future growth.

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News of China-based DeepSeek’s pledge to rival OpenAI’s ChatGPT in reasoning capabilities at lower costs despite US restrictions blocking China’s access to advanced AI-training processors triggered divergent reactions in global markets in late January. While tech stocks worldwide dipped amid investor caution, Chinese equities rallied, with Hong Kong’s Hang Seng Index surging to three-year highs.

In February, Chinese President Xi Jinping also held a meeting with tech entrepreneurs, while Beijing has shown increasing support for the private sector after adopting a more restricted approach in recent years.