The Latest on Hong Kong’s IPO Market, Stock Connect, Virtual Assets and Tokenisation

Introduction and overview

Hong Kong’s equity finance landscape is evolving rapidly in 2025, shaped by regulatory progress and market innovation. Hong Kong’s initial public offering (IPO) market is experiencing its strongest recovery since 2021, with fundraising in the first half of 2025 surging sevenfold as compared to that of last year, driven primarily by supportive policy measures. The Stock Connect expansion continues to deepen integration with Mainland China’s markets while the new re-domiciliation regime is attracting global companies to relocate.

Concurrently, the proposed licensing framework for virtual assets dealing and custodian services and the growing momentum of real-world assets tokenisation reflect Hong Kong’s commitment to positioning itself as a hub for digital finance and new-economy growth.

Latest updates on Hong Kong’s IPO market – a recovery driven by policies

According to KPMG’s 2025 mid-year review, H1 2025 saw 42 completed Hong Kong IPOs, raising HKD107.1 billion – a 700% increase in total funds raised and 40% increase in number of deals as compared to H1 2024. The Hong Kong Stock Exchange (HKEx) reported that Hong Kong was the No. 1 global IPO venue in H1 2025, with USD4.8 billion more of funds raised than the second leading exchange in the world, according to Dealogic data.

Although the total funds raised did not exceed H1 2021’s peak of HKD213.2 billion (with 46 completed deals) according to KPMG’s 2021 mid-year review, reflecting smaller average deal sizes, H1 2025 witnessed a remarkable market rebound after it hit the bottom in 2024.

In terms of deal pipeline, there was a significant uptick in IPO pipeline in H1 2025 due to a large number of A1 applications – as at 30 June 2025, there were 219 active applications on the Main Board, a record high according to KPMG’s 2025 mid-year review.

Regarding liquidity, HKEx recorded an average daily turnover (ADT) of HKD240.2 billion in H1 2025, representing a 118% jump in turnover when compared with HKD110.4 billion for H1 2024. Also, ADT from the Southbound channel of Stock Connect reached HKD110.96 billion in H1 2025, a 195% increase compared with H1 2024.

Recovery driven by policies

The recent supportive environment in Mainland China and Hong Kong and the interactions between policies have played an important role in driving Hong Kong’s stock market comeback. Below are some of the policies that come into play in 2024 and 2025.

In April 2024, the China Securities Regulatory Commission (CSRC) announced the “Five Capital Market Cooperation Measures with Hong Kong” (5 项资本市场对港合作措施), which, among others, encourage leading enterprises in Mainland China to list in Hong Kong, creating a clear pathway for high-quality Mainland China companies to raise funds through listings in Hong Kong.

In August 2024, the Securities and Futures Commission (SFC) and the HKEx jointly announced a temporary reduction in the minimum market capitalisation at the time of listing of specialist technology companies under Chapter 18C of the Hong Kong Listing Rules (Listing Rules) for a period of three years until August 2027. The significant reduction in initial market capitalisation requirement allows many specialist technology companies that were unable to meet the previous requirement due to the challenging macroeconomic environment to be eligible to go public under Chapter 18C of the Listing Rules.

In October 2024, the SFC and the HKEx jointly announced an accelerated timeframe for a new listing application vetting process, providing greater clarity and predictability to listing applicants.

• If a listing application meets all applicable requirements, the regulators will take no more than 40 business days (excluding response time of the listing applicant) and a maximum of two rounds of regulatory comments to assess and indicate whether there are any material regulatory concerns. Taking into account around 60 business days expected to be taken by the listing applicant to satisfactorily address regulators’ comments and subject to the Listing Committee’s approval, the application process should be completed within the 6-month application validity window.
• An existing A-share listed company that has an expected market capitalisation of HKD10 billion and has complied with all laws and regulations applicable to its A-share listing in all material respects in the last two financial years before the listing application, will be entitled to a further accelerated timeframe of 30 business days (excluding response time of the listing applicant) with one round of regulatory comments.

In May 2025, the CSRC stated in a press conference that it will create conditions to support high-quality “China concept stock” enterprises to return to the Mainland China and Hong Kong stock markets.

In May 2025, the SFC and the HKEx jointly announced the launch of TECH, a dedicated technology enterprises channel, which supports prospective specialist technology companies and biotech companies in understanding applicable Listing Rules and preparing for their listing in Hong Kong by providing guidance on the eligibility and suitability for listing and case-specific issues through a dedicated specialised team. In addition, the HKEx now permits such companies to file their listing applications confidentially, which is particularly important given their heightened vulnerability in their early stage development compared to other industries.

In June 2025, the General Offices of the CPC Central Committee and the State Council issued opinions regarding the deepening of the comprehensive reform pilot programme in Shenzhen, which allow companies in the Greater Bay Area (GBA) that are listed on the HKEx to list on the Shenzhen Stock Exchange.

In August 2025, the HKEx published conclusions to its consultation paper on proposals to optimise IPO price discovery and open market requirements which, among others, adopted a new set of initial public float requirements (ie, a percentage of an issuer’s securities that are held in the hands of the public at the time of listing), under which (i) issuers not incorporated in Mainland China with a single class of shares and H-share issuers with no other listed shares are required to have an initial public float ranging between 10% and 25% (depending on the market value of the relevant class of shares at the time of listing), and (ii) A+H issuers are required to have an initial public float of 10% or HKD3 billion in market value.

Recent policies drive a two-way opening of capital markets. For instance:

• The HKEx’s new initial public float requirements lowered the barriers for sizeable A-share companies to seek A+H listing in Hong Kong.
• From “A-share to H-share” to “H-share to A-share”, Mainland China companies (especially GBA companies) now have more choices of paths to capital.
• A specialised consultation channel, confidential filing option and faster vetting process means enhanced efficiency in the HKEx’s performance of its role as the global fundraising platform, especially for Mainland China tech companies and quality companies seeking to go global.

Stock Connect expansion

Stock Connect, a mutual market access scheme under which investors in Mainland China and Hong Kong can trade and settle securities listed on each other’s market through the stock exchanges and clearing houses in their home market, celebrated its 10th anniversary in 2024. Since the launch of the Shanghai–Hong Kong Stock Connect in 2014 and the Shenzhen–Hong Kong Stock Connect in 2016, it has expanded from equities to bonds, Exchange Traded Funds (ETFs), and interest rate swaps.

In 2024, ETF eligibility requirements under Stock Connect were relaxed. IMM (International Monetary Market) trades, backdated trades and a solo compression service were introduced to Swap Connect. OTC Clear has accepted China Government Bonds and Policy Bank Bonds as collateral for Swap Connect from 13 January 2025.

Proposed licensing regimes for virtual assets dealing and custodian services

Hong Kong continues to strengthen its regulatory framework for virtual assets (VAs) with two new legislative proposals aimed at licensing regimes for providers of VA dealing and custodian services respectively. The proposals build on earlier frameworks, including the 2022 policy statement on VA development and the 2023 licensing regime for VA trading platforms (VATPs).

On 27 June 2025, the Financial Services and the Treasury Bureau and the SFC jointly issued two sets of consultation paper seeking public feedback on the proposed regimes. The Hong Kong government has been emphasising a “same activity, same risks, same regulation” approach, ensuring parity between traditional financial services and VA activities. The proposed regimes align with Hong Kong’s commitment to fostering a secure and innovative virtual asset ecosystem while addressing risks related to money laundering, terrorist financing (ML/TF) and investor protection.

Scope of the proposed VA dealing regime

The proposed VA dealing licensing regime seeks to regulate businesses engaged in VA dealing services, including conversions of VAs (both VA-to-VA and VA-to-fiat conversions) and brokerage activities, block trading activities and activities of advisers or asset managers.

The regime will apply to all VA dealing services, whether conducted through physical outlets, digital platforms or hybrid models. Notably, peer-to-peer trading between individuals without intermediaries will remain exempt.

Key features of the proposed regulatory framework for VA dealing services

1. Proposed eligibility

Applicants must be locally incorporated companies or companies incorporated elsewhere but registered in Hong Kong under the Hong Kong Companies Ordinance (Chapter 622 of the laws of Hong Kong) (CO).

Fit-and-proper tests will apply to the applicants, substantial shareholders and individuals carrying out VA dealing functions for the corporate entity.

At least two responsible officers must oversee compliance with anti-money laundering and counter-terrorist financing (AML/CFT) requirements.

2. Proposed regulatory requirements

AML/CFT compliance – licensees must adhere to customer due diligence (CDD) and record-keeping obligations under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615 of the laws of Hong Kong).

Financial resources – minimum paid-up capital of HKD5 million and liquid capital requirements of up to HKD3 million (depending on the business model) and excess liquid capital equivalent to at least 12 months of its actual operating expenses.

Knowledge and experience – a robust corporate governance structure with personnel qualified in regulatory compliance (eg, passing a paper on regulatory knowledge).

Financial reporting and disclosure – non-bank licensees must submit audited accounts and meet prescribed disclosure standards.

Information and notifications – regular updates to regulators on wallet addresses, business scope and service offerings.

Investor protection – measures include risk assessments, client suitability checks and segregation of client assets. Policies to mitigate ML/TF risks (eg, blockchain analytic tools) and operational risks (eg, counterparty-related and custody risks).

3. Proposed allowed activities

Licensees may engage in spot trading and brokerage but must comply with token admission criteria similar to VATPs.

The offered tokens that retail investors can trade in will only include high-liquidity tokens and HKMA-licensed stablecoins.

4. Proposed sanctions and enforcement

Unlicensed carrying out, holding out as carrying out and active marketing of VA dealing services may face fines of up to HKD5 million and imprisonment for seven years.

Engagement in fraudulent or deceptive behaviour in VA transactions could result in fines of HKD10 million and a ten-year imprisonment.

The HKMA will have inspection and investigative powers and the SFC will have disciplinary sanctions and investigative powers, with a review tribunal mechanism for appeals.

Scope of the proposed VA custodian regime

The proposed VA custodian licensing regime targets businesses involved in safekeeping of VAs on behalf of clients, and/or managing private keys or other instruments enabling VA transfers (eg, smartcards, and authentication credentials for accessing private keys) on behalf of clients.

Examples of entities which are required to obtain a licence would include banks, subsidiaries of locally incorporated banks, associated entities of SFC-licensed VATPs and licensed or registered fund managers but exempt technical service providers, bank security vaults storing encrypted backups of keys and stablecoin issuers licensed by the HKMA (provided they only have custody over their own stablecoins).

Key features of the proposed regulatory framework for VA custodian services

1. Proposed eligibility

Applicants must be locally incorporated or registered in Hong Kong, with a physical presence.

Fit-and-proper tests apply to all substantial shareholders and individuals carrying out VA custodian functions for the corporate entity.

Two responsible officers are mandatory to oversee compliance with regulatory standards.

2. Proposed operational safeguards and risk management

Robust controls for private key storage, like multi-party computation or sharding, are required. Client assets must be segregated, and cybersecurity measures must prevent breaches.

3. Proposed financial resources and compliance obligations

Licensees need HKD10 million minimum capital and a minimum required liquid capital up to HKD3 million (depending on the business model).

Licensees must follow AML/CFT rules.

Non-bank licensees must publish audited accounts and disclose relevant information to regulators.

4. Proposed allowed activities

Custody services of VAs and instruments which enable transfer of client VAs are permitted.

Ancillary activities like settlement, deposit and withdrawal of client VAs may be allowed.

5. Proposed sanctions and enforcement

Unlicensed carrying out, holding out as carrying out and active marketing of a regulated VA custodian service will be liable to a fine of HKD5 million and imprisonment for seven years.

The HKMA will have inspection and investigative powers and the SFC will have disciplinary sanctions and investigative powers, with a review tribunal mechanism for appeals.

Implications

By addressing ML/TF risks and enhancing investor protection, the regimes seek to foster sustainable growth in the virtual asset sector. However, industry feedback will be crucial in refining the final laws to ensure practicality without stifling innovation.

For stakeholders, the key takeaway is clear: prepare for stricter oversight, engage with regulators during the consultation and adapt business models to meet evolving compliance standards.

Tokenisation of real-world assets

The Hong Kong government maintains a supportive stance toward fintech innovation, aiming to foster a technology-neutral regulatory framework that balances market development with stability. Beyond regulation, the Hong Kong government is also actively working to bridge traditional finance with blockchain-based ecosystems, ensuring seamless interoperability.

Among other initiatives, Hong Kong is actively advancing the tokenisation of real-world assets (RWAs), a process that involves digitally representing physical or traditional financial assets on a blockchain. RWAs encompass a broad range of assets, including financial assets like equities, bonds, financial instruments, and funds, as well as non-financial assets like real estate, intellectual property, art, and future income streams. While Hong Kong has been focusing on developing the necessary infrastructure for tokenising securities and investment products, these efforts represent just one segment of the wider RWA landscape, which spans multiple asset classes with significant potential for digitalisation.

SFC guidance

The SFC has provided guidance on tokenisation of SFC-authorised investment products, giving valuable insights into tokenisation of other types of RWAs. The SFC maintains that tokenised products are fundamentally traditional products with a tokenisation wrapper. As such, these tokenised products remain subject to the same legal and regulatory framework that governs traditional securities markets such as the SFC authorisation and the prospectus requirement for offering to the public.

The SFC also emphasises that product issuers shall bear the ultimate responsibility for the management and operational soundness of the tokenisation arrangement irrespective of any outsourcing arrangement. At the same time, all the intermediaries and parties involved in the process (eg, fund managers, distributors, and transfer agents) are reminded to assess and mitigate risks associated with the tokenisation and adopt appropriate safeguards in managing such risks, such as:

• conducting due diligence on settlement finality and enforceability of extrinsic rights, technology aspects for issuance and maintenance, cybersecurity risk and controls, etc;
• maintaining proper records of token holders’ ownership interests;
• implementing a comprehensive and robust business continuity plan and adopting appropriate measures to manage and mitigate risks associated with the tokenisation arrangement;
• making adequate disclosure in the offering documents regarding the tokenisation arrangement, the ownership representation of tokens and the associated risks (such as cybersecurity risks, possibility of undiscovered technical flaws, evolving regulatory landscape, potential challenges, etc);
• appointing competent staff with relevant experience and expertise to operate and/or supervise the tokenisation arrangement; and
• seeking prior consultation with the SFC regarding the tokenisation business plan.

Project Ensemble Sandbox

In a significant move to advance asset tokenisation, the Hong Kong Monetary Authority (HKMA) launched the Project Ensemble Sandbox in August 2024. This initiative seeks to develop next-generation financial infrastructure for seamless interbank settlement using wholesale central bank digital currency (wCBDC). The initial phase concentrates on four primary tokenisation use cases:

• fixed income and investment funds;
• liquidity management;
• green and sustainable finance; and
• trade and supply chain finance.

The Project Ensemble Sandbox enables the HKMA to evaluate technical interoperability between tokenised assets, deposits and wCBDC, while allowing industry participants to test real-world transaction scenarios. Since its launch in August 2024, the Project Ensemble Sandbox has seen steadily rising participation from financial institutions, fintech companies, and technology providers throughout 2025.

This development represents a pivotal advancement in the tokenisation of RWAs as tokenised money and deposits could be used for tokenised asset transactions, enabling instantaneous and irrevocable settlement. Insights gained from the sandbox experiments can also help shape a unified market infrastructure, reinforcing Hong Kong’s position as a hub for secure and efficient digital asset innovation.

Stablecoins Ordinance

The Stablecoins Ordinance, enacted on 1 August 2025, has significantly bolstered Hong Kong’s RWA tokenisation ecosystem by providing legal certainty and robust safeguards for fiat-referenced digital payments. By establishing a clear regulatory framework and licensing regime for fiat-referenced stablecoin issuers, the Stablecoins Ordinance enhances market confidence in using stablecoins as a settlement medium for tokenised asset transactions.

This aligns seamlessly with the Project Ensemble Sandbox, where wCBDC and tokenised deposits are being tested for interbank settlements. Through the combination of wCBDC integration with regulated stablecoins, Hong Kong is establishing itself as a frontrunner in secure, stable and efficient tokenised finance, creating pathways for wider adoption of blockchain-based asset markets.

Launch of inward company re-domiciliation regime

The Hong Kong inward company re-domiciliation regime took effect on 23 May 2025.

A foreign company re-domiciled to Hong Kong will have the same rights as a Hong Kong incorporated company of the same kind under the CO. The re-domiciliation preserves its legal identity, properties, rights, obligations and liabilities. The contracts and legal processes applicable to it before the re-domiciliation process are not affected because no new legal entity is created through such process.

This regime does not allow outward re-domiciliation of Hong Kong incorporated companies to re-domicile to another jurisdiction.

Company types

Four types of companies may re-domicile to Hong Kong, namely:

• private companies limited by shares;
• public companies limited by shares;
• private unlimited companies with a share capital; and
• public unlimited companies with a share capital.

The companies are not allowed to change their company types through the re-domiciliation.

Eligibility

There are no economic substance tests, implying that even small companies can re-domicile to Hong Kong. However, the applicant must comply with certain legal, financial and integrity, and other documentary requirements. For instance:

• The applicant has completed its first financial year-end following incorporation, when it makes the application.
• The company type to be applied for re-domiciliation is the same or substantially the same as the applicant’s type of company in its original domicile.
• The re-domiciled entity will not be utilised for any unlawful activities or purposes that conflict with public interest.
• Where neither the laws of the original domicile nor the applicant’s constitutional documents require members’ consent, such consent should nonetheless be obtained through a resolution duly passed by at least 75% of eligible members.
• The applicant is able to pay its debts as they fall due during the 12 months after the application date.
• The applicant shall submit financial statements as at a date no more than 12 months prior to the application date. These statements must be audited only if auditing is a legal requirement in the original domicile.
• The application is made in good faith and is not intended to defraud any existing creditors.
• The applicant is not in liquidation. No receiver or manager is in possession of its properties, and no compromise or arrangement with any third party is currently being administered.
• A legal opinion from a legal practitioner of the original domicile’s law is required to confirm that the proposed re-domiciliation is permissible under the law of that original domicile. This opinion must also address the applicant’s due registration in the original domicile, company type, members’ consent and solvency status.
• A director’s statement, as prescribed in the re-domiciliation form, must be provided to affirm the company’s incorporation/registration status, solvency, requisite permissions, members’ consent, and intent regarding the proposed re-domiciliation.

Outlook and conclusion

Looking ahead, Hong Kong is poised to strengthen its status as a global financial hub despite macroeconomic and geopolitical challenges. Bolstered by supportive policies and a progressive digital economy framework, Hong Kong leverages its unique position as Mainland China’s financial gateway to attract capital across both traditional and digital asset markets.