![\"\"](\"https:\/\/www.europesays.com\/ie\/wp-content\/uploads\/2025\/10\/George-Molina_feature-330x200-1-1.png\")
George Molina, Franklin Templeton<\/p>\nHong Kong IPOs are booming, but international investors are getting squeezed out of allocations by cornerstone investors and \u2018clawback\u2019 listing rules that favour retail, forcing funds to use block trades and risk priced liquidity to alleviate the squeeze.<\/p>\n
Hong Kong has surged as the top global non-US IPO venue in 2025. In the first nine months of 2025, 66 companies had raised US$23.2 billion. More than 90% of listed IPOs this year are up on listing price, and several have doubled from their first day of trading.<\/p>\n
The bigger floats too, have delivered and kept going up from IPO day. Bubble tea chain Mixue priced at HK$202.50, up 45% on its first day, was trading HK$376 on 7 October, up 86% since listing.<\/p>\n
Battery giant CATL raised $4.6 billion in May and closed up 16% on day one; it is now trading at HK$547 or 115% above its HK$263 IPO price.
Last month\u2019s US$3.2bn spin-off, Zijin Gold, priced at HK$71.59, surged by 65% on its first day; now trading at HK$144, it trades at 106% above IPO price.<\/p>\n
These IPOs illustrate how scarce and in demand HK listed paper is for non-cornerstone institutional investors, exacerbated by \u2018clawback\u2019 rules which ensure that oversubscribed retail orders get the lion\u2019s share of allocations.<\/p>\n
On trading floors, the appetite for IPOs is real but getting allocations is extra hard.
\u201cWe\u2019re all trying to get into these deals,\u201d says George Molina, who leads trading across Asia, emerging markets and Latin America at Franklin Templeton. \u201cValuations are more realistic than five or ten years ago, but if you\u2019re not in as a cornerstone or anchor\u2014and with retail on top\u2014you\u2019re often competing for maybe a quarter to a third of the book.\u201d<\/p>\n
The actual percentages vary widely from deal to deal, subject to consumer brand recognition.
For Mixue, aggregated retail orders were huge with the initial offered tranche of 1.7 million shares oversubscribed 5258 times, triggering the maximum clawback and lifting the Hong Kong public offer retail shares allotted to 8.5m shares (50% of the deal). Cornerstones took 7.7 million shares, or 45%. That left 0.8 million shares or 4.9% in the international tranche for non-cornerstone institutions on day one\u2014essentially a rounding error for global funds.<\/p>\n
CATL\u2019s IPO was more friendly to international investors. Despite the retail tranche being 151 times oversubscribed, no claw back was organized. After the greenshoe was fully exercised, the Hong Kong public offer (the retail part) was 10.2m shares (7.5%) and the international offering 125m shares, or 92.5%. Cornerstones investors subscribed to 77.4 m shares, or 57.1%, leaving 48m shares, or 35.4% for non-cornerstone institutions.<\/p>\n
George Molina, Franklin Templeton<\/p>\n
Huge retail demand had tightened available liquidity further. \u201cWhen a deal is oversubscribed, the clawback grows\u2014and Hong Kong now allows \u2018double-dipping\u2019, so a cornerstone can also apply in the public offer,\u201d Molina says. \u201cIt makes scarce paper even scarcer.\u201d Given the extreme volatility, trying to buy IPO shares in the secondary market via the exchange is a hopeless task, leaving block trading as the only alternative.<\/p>\n
Seeking \u2018natural blocks\u2019 from traditional sources only helps up to a point, Molina told Global Trading. \u201cBlocks are happening, but you see fewer hedge funds taking the other side, more risk now sits with brokers, and wholesale market makers like Virtu, Jane Street, Citadel and Millennium are providing liquidity because they can hedge it more ways.\u201d<\/p>\n
These ELPs are even happy to offer 1 to 2 percent of average daily volume (ADV). Market sources this service is offered for around eight basis point brokerage.<\/p>\n
At Franklin Templeton, execution is split accordingly. \u201cRoughly 40% of our Asia flow runs on algos\u2014mainly when we\u2019re at 5% ADV. Above that, we go high-touch and speak to as many brokers as we can. About 50% of our business is high touch,\u201d, Molina said.<\/p>\n
New HKEX rules are codifying the squeeze<\/strong><\/p>\n On 5 August 2025, HKEX and the SFC implemented the IPO price discovery and open market reforms. Issuers now choose between two initial retail allocation frameworks. Mechanism A with a minimum 10% dedicated to retail, with stepped-up clawbacks depending on retail demand, or Mechanism B with a minimum 5% retail with a different clawback ladder. The reforms also relax restrictions on cornerstone investors, expressly allowing participation in both pre-IPO placings and the initial public offering under prescribed conditions (\u201cdouble-dipping\u201d).<\/p>\n The changes hard-wire larger retail tranches and permit more overlap between cornerstones investors and the public market. This thins the liquidity available to institutional investors. With Q4 pipelines looking busy \u2013 as of 30 September 277 companies were in the pipeline according to HKEX \u2013 Molina\u2019s team filters hard for deals that can deliver portfolio-relevant size. \u201cIf an allocation looks like US$5 million, it may not be worth the work,\u201d he says. \u201cYou need early engagement\u2014anchors or cornerstones where feasible\u2014plus targeted high-touch around pricing, pre-agreed channels with brokers and the wholesale market makers, and disciplined aftermarket adds keyed to index events.\u201d<\/p>\n Retail flows remain a real-time signal of possible liquidity squeeze and further post IPO demand. Mixue\u2019s retail book, for example, drew more than HK$1.6 trillion in orders, triggering the top clawback step.<\/p>\n In Hong Kong\u2019s 2025 IPO market, relying on blocks and IPO allocation alone rarely solves the exposure problem. The combination of bigger retail tranches permitted cornerstone \u201cdouble-dipping,\u201d and fast index inclusion means meaningful positions come from seeking exposure pre-IPO and multi-channel execution.<\/p>\n","protected":false},"excerpt":{"rendered":"Hong Kong IPOs are booming, but international investors are getting squeezed out of allocations by cornerstone investors and…\n","protected":false},"author":2,"featured_media":123299,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[175],"tags":[79,18,19,17,188],"class_list":{"0":"post-123298","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-eire","10":"tag-ie","11":"tag-ireland","12":"tag-markets"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/123298","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=123298"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/123298\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/123299"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=123298"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=123298"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=123298"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
On big deals, the dynamic collides with index inclusions and reweightings.
Molina said: \u201cMega deals, think CATL and other $5 billion-plus offerings\u2014get re-weighted into benchmarks pretty quickly, which forces passive money to chase,\u201d\u201d<\/p>\n