Hong Kong’s equity capital markets have roared back to life in 2025, with Morgan Stanley and Goldman Sachs emerging as the dominant underwriters amid a wave of Chinese issuers raising funds through both initial public offerings and follow-on share sales.

The resurgence underscores Hong Kong’s renewed role as a global gateway for Chinese companies seeking international capital — even as geopolitical tensions persist.

According to recent data, equity capital market (ECM) activity in Hong Kong has surged by 232 per cent year-on-year, with total ECM flows reaching about US$73.1 billion by November.

Alongside this rebound, Western banks have far outpaced their Chinese rivals: Morgan Stanley alone raised approximately US$11.6 billion, followed by Goldman Sachs at US$7.4 billion.

Local Chinese banks such as CITIC and CICC trailed significantly behind.

The dramatic upswing was fuelled by headline deals such as CATL’s US$4.6 billion share sale and BYD’s US$5.6 billion offering.

These high-profile transactions, along with dozens of other listings and follow-ons, helped push Hong Kong’s IPO and follow-on volume to levels not seen since 2021. Earlier in the year, the city’s Stock Exchange recorded one of its strongest first halves in recent memory.

The reasons behind this surge are manifold.

A favorable shift in Beijing’s policies has encouraged mainland firms to tap Hong Kong’s capital markets as a strategic alternative to U.S.-based listings — particularly amid regulatory uncertainty and geopolitical friction with the West.

Moreover, recent reforms in Hong Kong have streamlined listing procedures, improving efficiency and transparency for issuers.

Global investors, especially long-only funds based in the United States, have responded eagerly: for Morgan Stanley, foreign investors accounted for roughly 87 per cent of participation in IPOs and follow-on deals above US$200 million this year.

Such engagement underscores renewed confidence in Chinese equities and a growing appetite for exposure to Asia-Pacific growth stories.

For investment banks such as Goldman Sachs and Morgan Stanley, the resurgence in Hong Kong presents both a vindication of their Asia strategy and a lucrative opportunity.

Their dominance in underwriting equity deals — at a time when many other global capital centres remain sluggish — highlights the strategic importance of Hong Kong as a conduit for international capital into China.

As the year closes, Hong Kong stands resurgent, again serving as a critical financial bridge between East and West.