Citi sees resilient demand for Chinese AI IPOs despite valuation concerns

Citi predicts ongoing investor interest in Chinese AI supply-chain firms despite valuation worries and heightened scrutiny, according to Simon Yuan, the bank's China investment banking chief. Speaking at the International Monetary Fund’s annual meetings in Bangkok, Yuan affirmed that demand for Chinese AI-related IPOs remains strong, even as data centre companies, particularly in the U.S., have experienced recent valuation pullbacks.

Hong Kong's IPO market, Yuan noted, enjoys a balanced mix of domestic Chinese and international investors, bolstered by increasing southbound flows from mainland China that have enhanced liquidity and supported companies seeking capital. However, the Citi executive cautioned that Hong Kong would not be entirely insulated from a broader correction in global AI valuations, particularly if the U.S. AI investment cycle were to experience a significant downturn.

Chinese hardware manufacturers have reaped the benefits of rising global demand for AI infrastructure, with higher sales volumes and stronger unit prices. Many have also established manufacturing facilities outside mainland China to serve international customers and mitigate geopolitical risks. Looking ahead, Yuan expects Hong Kong's equity capital markets to pivot next year from AI hardware suppliers to focus on Chinese AI model developers and application companies.

Nevertheless, he cautioned that future issuers would need to showcase sustainable business models, robust revenue growth, and profitability to attract investors. The outlook is bolstered by a robust year for Hong Kong's IPO market, driven by Chinese technology firms seeking additional funding. In the first nine months of 2026, 118 companies were listed in Hong Kong, raising HK$388 billion (USD$49.4 billion) - a 106% increase from the same period last year.

This underscores the sustained investor appetite for Chinese technology listings, even as concerns over high AI valuations introduce uncertainty across global equity markets.