HONG KONG – A new Hong Kong Stock Exchange rule allowing for U.S.-style confidential IPO filings has triggered a surge of interest from Chinese companies, with at least two dozen secretly applying to go public this year and many more preparing to follow suit. The move is bolstering Hong Kong’s position as the world’s top destination for company listings in 2023.
Implemented in May, the new mechanism permits companies, particularly those in sensitive technology sectors, to keep their business and financial details private during the initial stages of the listing process. This strategic shift offers firms greater flexibility amid heightened market volatility and geopolitical tensions.
Chinese companies in cutting-edge fields, including autonomous driving firm Zelos Tech and artificial intelligence (AI) startup MiniMax, have already filed confidentially, according to sources familiar with the matter. The majority of these applications have come through the new Technology Enterprises Channel (TECH), which is designed for niche tech and biotech firms.
A Strategic Advantage in Uncertain Times
For companies in sectors like AI and semiconductors, which are often at the center of geopolitical rivalry, the ability to file privately is a major draw. According to senior bankers, the mechanism allows these firms to navigate the complex regulatory review process without public scrutiny, shielding them from negative press if they need to delay or alter their IPO plans.
“The market just shifts overnight with geopolitical or just tariff news,” said one Chinese company executive who has considered a confidential filing. “No one wants to be in the headline of an IPO flop after they file.”
Previously, only companies already listed on another major international exchange could file confidentially in Hong Kong without a special exemption. The new rule levels the playing field, making the city more competitive with New York, where confidential filings have long been standard practice.
Overtaking New York
The influx of Chinese companies has propelled Hong Kong to the top of the global charts for initial and secondary listing volume so far this year, surpassing its chief rival, the New York Stock Exchange, according to data from LSEG.
This trend shows no signs of slowing down. The Hong Kong Exchanges and Clearing Ltd (HKEX) has over 190 listing applications in its pipeline, with technology and healthcare firms accounting for approximately 45% and 20% of the total, respectively.
Even as a record number of Chinese firms seek listings in the U.S., this dual-track interest highlights Hong Kong’s growing appeal. U.S.-listed robotaxi companies Pony AI and WeRide have also submitted confidential filings for secondary listings in the city, sources said.
Protecting Innovation and Trade Secrets
The new rule is particularly beneficial for innovation-driven companies that need to protect their intellectual property.
“These companies have valuable IP that’s being developed and they’re trying to monetize that,” explained Jean Thio, a capital markets partner at the law firm Clifford Chance. She noted that biotech firms are especially cautious about releasing research and development plans early. “If you were to put all that information out at such an early stage, there are worries that you could be leaking confidential trade secrets which your competitors could use against you.”
In one of the most high-profile examples, fast-fashion giant Shein also lodged a confidential filing for a Hong Kong IPO last month, demonstrating the broad appeal of the new mechanism beyond the tech sector.
