The Hang Seng Index has had an excellent run. As David Chao, global market strategist, Asia Pacific at Invesco, pointed out in a new commentary, the index has been one of the best performing major benchmarks this year, gaining nearly 30% in US dollar terms.
There may be quite a few factors lined up to drive it even higher, unlike bourses over the other side of the Pacific.
According to Invesco, the Hong Kong bourse raised US$13.9 billion in initial public offerings in the first half of the year, ahead of second place Nasdaq’s $9.2 billion.
Last month, S&P Global Market Intelligence described Hong Kong as a “top IPO destination”. To be sure, much of this was thanks to follow-on listings by Mainland companies that went public elsewhere, and there are plenty more of those to come. This only makes Hong Kong more attractive for other listing candidates and global investors.
“The strong IPO pipeline is a strong signal of corporate confidence and investor appetite,” Chao said. “Hong Kong stands to benefit from shifting geopolitical dynamics, as an increasing number of Chinese corporates opt to list in the city, redirecting IPO activity away from US exchanges.”
He said the Hang Seng Index still looks cheap relative to Asian and global peers, so in principle it could well go higher. Investors seeking exposure to the likes of DeepSeek and China’s potential role in the artificial intelligence revolution are coming to Hong Kong, as are many other investors seeking to get more exposure to China and to tilt away from the US.
S&P Global Market Intelligence’s investment manager index for August shows US equity investors are increasingly risk-averse, anticipating serious losses, and that US equity valuations are looking very peaky. According to Jingyi Pan, associate director for market intelligence at S&P, investor sentiment “visibly weakened” amid a slew of tariff developments, including higher tariffs on major US trading partners, and the announcement of new tariffs on semiconductors.
The Trump administration’s policies look likely to knock US bourses off their top global position. And Hong Kong stands to benefit.
