Hong Kong IPO boom at risk as cornerstone backers get cold feet, sources say
Exuberance among cornerstone investors in Hong Kong’s booming initial public offering (IPO) market seems to be fading, forcing some issuers that had hoped to list this month to postpone their offerings. With more than 60 per cent of new listings in the third quarter now trading below their issue prices, cornerstone investors – who typically receive guaranteed allocations in exchange for holding…
Cornerstone investors in Hong Kong's thriving IPO market are experiencing a shift in sentiment, raising concerns for issuers planning to list this month. As over 60 percent of third-quarter listings are trading below their issue prices, these key backers – who commit to holding shares for six months in exchange for guaranteed allocations – are reevaluating their investment strategies.
At least one IPO originally scheduled for October has been pushed back to the following month after some institutional investors withdrew from verbal agreements. "Bankers are now racing to find replacements," said sources familiar with the situation. The market slowdown follows a weak performance from Hong Kong's largest debuts this year, with six out of nine listings raising over $1 billion now trading in the red.
For instance, Eastroc Beverage, a Chinese energy-drink maker, has dropped more than 60 percent since its February debut. The weakness in IPO valuations has eroded long-term investor confidence, particularly amid ongoing market volatility, according to Edward Au Chung-hing, a managing partner at Deloitte China. While IPO funds raised in Hong Kong reached $48.4 billion in the first nine months of 2026, the highest level since 1980 records began, 20 of the 31 companies that listed in the third quarter fell below their offer prices as of September 30.
Among them, Rigol Technologies, Medcaptain Medical Technology, Momenta, and Beijing Tong Ren Tang Healthcare Investment have seen their share prices halved from their offer prices. Despite international cornerstone investors actively participating in Hong Kong's IPO market, most have recorded paper losses, with Temasek subscribing to more than $500 million worth of shares across several failing companies.
While smaller listings have a higher cornerstone participation rate, the overall trend indicates that investors are becoming more selective and cautious, potentially reducing investment amounts, but this is unlikely to deter issuers' ambitions to list in Hong Kong, according to Edward Au.
Written by urgent.news from South China Morning Post - Hong Kong's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
