Economic Watch: Hong Kong sees equity market revival amid policy incentives, improved outlook
Recent initiatives from the central government have boosted market liquidity. Upgrades to the Bond Connect, enhancements to the Cross-boundary Wealth Management Connect Scheme, and facilitative payment arrangements for Hong Kong and Macao residents purchasing properties in the Chinese mainland cities of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), have contributed to this positive momentum.
The China Securities Regulatory Commission's efforts to optimize the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connects further reinforce Hong Kong's status as an international financial hub.
Economist Leung Hoi Ming notes that China's position as the world's second-largest economy is expected to contribute about 21 percent of global GDP growth, providing solid support for Hong Kong stocks.
Hong Kong consistently ranks as the world's freest economy, third among global financial centers, and maintains top positions in investment climate, international trade, commercial regulations, and air cargo.
The Hong Kong Special Administrative Region (HKSAR) government's moves to streamline market listing procedures have helped boost initial public offerings (IPOs) by 30 percent year on year to 52 cases by mid-July. Total funds raised soared 590 percent to 124 billion Hong Kong dollars (15.8 billion U.S. dollars), making Hong Kong the biggest IPO market worldwide, HKSAR Chief Executive John Lee said in a social media post on Monday.
The unique valuation advantage of Hong Kong stocks continues to attract both international and Chinese mainland investments. Recent data indicates a significant influx of southbound funds, reflecting renewed confidence among Chinese mainland investors.
Carlson Tong, chairman of Hong Kong Exchanges and Clearing Limited (HKEX), mentioned that Chinese mainland companies currently listed in Hong Kong account for 81 percent of the total market value.
The ongoing strength of Hong Kong stocks positively impacts both local and Chinese mainland capital markets, enhancing investor confidence and liquidity. Kevin Liu, chief offshore China and Overseas strategist at China International Capital Corporation, highlighted that active liquidity in the Hong Kong stock market is evident in an average daily trading volume of 240.6 billion Hong Kong dollars, showing a notable increase compared to the average daily trading volume in 2024, setting a historical high.
Improved financing conditions are encouraging companies to list and refinance, particularly in high-growth sectors like technology and innovation. Since early 2025, driven by sectors such as AI, new consumption, and innovative pharmaceuticals, Hong Kong's market has even outperformed its global counterparts at times, said Liu.
As the stock market rises, global interest in China's economy increases, promoting a virtuous circle of capital market openness and high-quality economic development, experts say.
Leung believes that the stock market's rise reflects positive expectations regarding the fundamentals of the economy of the Chinese mainland, attracting more attention and investment from global capital. This influx brings more mature investment concepts and resources into the capital market, further optimizing its structure, he added.
Meanwhile, experts emphasize the need for continued market optimization to attract long-term investment, noting that encouraging more quality companies to list in Hong Kong will deepen and stabilize the market, enhancing its appeal as a global capital platform.
The HKSAR government will continue to improve the listing regime and boost market liquidity to attract more high-quality global companies to list in Hong Kong, Lee pledged earlier.
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