Goldman Sachs' Hong Kong Surge: A Beacon for Asia's Tech-Driven Capital Shift

In the first half of 2025, Goldman Sachs ascended to the top of Hong Kong's equity underwriting rankings—a position it hadn't held since 2017. This meteoric rise underscores a broader structural shift in Asia's capital markets: a tech-driven pivot toward Hong Kong as the preferred gateway for Chinese firms seeking global capital while sidestepping U.S. regulatory hurdles. For investors, this signals an opportunity to reallocate toward Asia-Pacific tech firms and financial institutions like Goldman Sachs, which are leveraging regulatory reforms and geopolitical dynamics to dominate the region's fundraising landscape.

Strategic Allocation to Follow-On Offerings: Goldman's Winning Play

Goldman's success stems from its pivot toward follow-on equity offerings, which now account for 80% of Hong Kong's equity capital market (ECM) activity. Unlike traditional IPOs, which remain slow to rebound, follow-ons—such as BYD's $5.6 billion secondary listing and Xiaomi's $5.5 billion top-up—offer faster execution and higher demand from institutional investors.

This strategy has paid dividends. Goldman's equity deals in Q1 2025 alone totaled $6.8 billion, more than tripling its Q4 2024 performance. Competitors like JPMorgan and UBS lagged, having underestimated the shift toward secondary listings. For investors, this highlights the value of APAC tech and EV stocks, particularly those with dual listings in Hong Kong and mainland China.

Regulatory Tailwinds: Hong Kong's TECH Channel and Southbound Flows

Hong Kong's reforms, such as the Technology Enterprises Channel (TECH), have streamlined approvals for tech and biotech firms, slashing listing times and costs. The TECH channel's lower capital thresholds—$4 billion for tech and $8 billion for biotech—sparked a 711% surge in Q1 fundraising. Meanwhile, Southbound Stock Connect flows, which allow mainland investors to access Hong Kong markets, hit $78 billion in H1 2025, with forecasts of $110 billion by year-end.

These tailwinds have made Hong Kong the new IPO capital of Asia, with PwC projecting it could reclaim the title of global top IPO venue by 2026. For investors, this means favoring APAC tech firms with strong ties to Beijing's innovation agenda, such as battery giant CATL or AI leader Alibaba's cloud division.

Geopolitical Shifts: The “A-then-H” Strategy

U.S.-China tensions have accelerated Beijing's “A-then-H” strategy, which encourages firms to list in Hong Kong after securing a mainland IPO. Goldman's role in dual listings for firms like CATL ($5 billion raised for global projects) aligns it with this trend.

The CATL deal also revealed the risks of geopolitical friction: U.S. regulators pressured banks like Bank of America to withdraw, but Goldman and Morgan Stanley stayed, betting on long-term gains. For investors, this underscores the need to monitor U.S.-China trade dynamics but also to capitalize on Hong Kong's role as a “safe harbor” for Chinese tech firms.

Investment Implications: Where to Allocate

1. APAC Tech Stocks: Focus on sectors like EVs (BYD, NIO), AI (Alibaba Cloud, Tencent AI Lab), and biotech (Sino Biopharm).
2. Consider ETFs like the MSCI China Technology ETF (KWEB) for diversified exposure.
3. APAC Banks Leveraging ECM Growth: Goldman Sachs (GS) and China International Capital Corporation (CICC) are beneficiaries of Hong Kong's ECM boom.
5. Regulatory Monitor Stocks: Firms like Hong Kong Exchanges & Clearing (0388.HK) benefit from increased listings activity.

Risks and Considerations

• Fee Compression: High competition has driven fees down to 0.8% (e.g., CATL's deal), squeezing margins for banks.
• Valuation Risks: Overheated tech sectors may face corrections if geopolitical tensions escalate.

Conclusion: Riding the Asia-Pacific Tech Wave

Goldman Sachs' rise in Hong Kong is no fluke—it's a microcosm of Asia's tech-driven capital shift. Investors ignoring this trend risk missing out on the region's next growth phase. By allocating to APAC tech firms and banks like Goldman Sachs, which are masterfully navigating regulatory and geopolitical currents, investors can position themselves for gains in a market primed to redefine global capital flows.

As Hong Kong's ECM pipeline remains robust, the message is clear: follow the tech, and follow the tailwinds.