More jumbo stock offerings from some of China's biggest onshore-listed companies are making their way to Hong Kong, supported by demand from global funds, improved valuations and market reforms, according to the nation's biggest investment bank.

"Some leading A-share companies with a large market capitalisation in various industries [are looking] to issue H shares, which could attract some international long-term funds and institutional investors," said Xu Jia, deputy head of the investment banking department at China International Capital Corporation (CICC).

Investors from Europe, Asia-Pacific and mainland China had been encouraged by a rebound in market sentiment over the past quarter, with many new initial public offerings (IPOs) trading higher on their debuts, the bank said at a briefing on Tuesday.

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China's biggest condiment maker Foshan Haitian Flavouring and Food submitted an application on Monday to list its shares. It has selected CICC, Goldman Sachs and Morgan Stanley as joint sponsors, with media reports suggesting the Shanghai-listed firm was looking to raise at least US$1.5 billion.

Contemporary Amperex Technology, or CATL as the world's largest producer of batteries for electric vehicles is known, could raise US$5 billion in one of Hong Kong's largest IPOs in recent years, according to media reports. The Shenzhen-listed firm announced its plan last month, pending approvals from shareholders and regulators.

The firm was poised to hire Bank of America, CICC, CSC Financial and JPMorgan Chase as lead arrangers, according to a Bloomberg report on Tuesday.

"We anticipate that there will be about five jumbo IPOs" based on available information, said Kenny Wen, head of investment strategy at KGI Asia. He did not specify the time frame. "Three will be in the US$1 billion tier, one in the US$2 billion tier and another in the US$5 billion tier."

The return of billion-dollar IPO deals will whet the appetite of Wall Street bankers, who trailed Chinese rivals in Hong Kong last year as deal volume jumped. China Merchants Bank was credited with US$1.1 billion from 38 deals, while CICC came in second with US$970 million from 24 deals, according to data compiled by the London Stock Exchange Group.

UBS and Goldman ranked fifth and sixth, the highest among foreign investment banks.

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IPO proceeds in Hong Kong surged 87 per cent to US$11 billion last year, making it the fifth-busiest venue globally. CICC helped complete Midea Group's HK$35.6 billion (US$4.6 billion) listing in September, the biggest IPO in Hong Kong last year and the second-largest worldwide after the US$5.1 billion IPO of Lineage, a US cold-storage warehouse operator.

A semblance of stability in secondary-market trading has helped repair investor confidence, aided by a slew of measures from Beijing since late September. The stimulus blitz fuelled risk appetite and powered a world-beating rally in Chinese stocks last quarter.

"Hong Kong still has sufficient liquidity in the primary market," said Shi Qi, deputy head of CICC's capital markets department. "There are phased opportunities that are conducive to the launch of IPOs in these windows."

This year's challenge, however, is in extracting higher valuations and pricing for these impending IPOs, she said, referring to the perennial discount in Hong Kong-listed shares relative to those traded in Shenzhen or Shanghai issued by the same companies.

For example, Midea traded at HK$74.80 in Hong Kong on Wednesday, while its A shares fetched about 5 per cent more at 73.82 yuan (HK$78.42) in Shenzhen. The premium was 47 per cent on average in 2024 across all dual-listed Chinese stocks, according to Bloomberg data, because of local buying support and limited risk to external factors.

"The bigger challenge is narrowing the pricing range even further to find suitable investors and stabilise stock prices," Shi said. "We are optimistic about the relatively notable improvement in 2025 compared to the past two to three years."

The Hong Kong stock exchange's recent market reforms have also made it easier for big mainland companies to raise funds. China's central bank has said that authorities were deepening market connectivity by encouraging more high-quality mainland enterprises to sell shares and bonds in Hong Kong.

A public consultation process to optimise IPO price discovery and increase flexibility for issuers has also been well received by market participants, CICC said.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.

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