HONG KONG — Eight stocks, including Deepexi, trading on the Hong Kong exchange increased in price by over 300% between their initial offering and the final trading day before their inclusion in the Stock Connect program in March 2025. All eight of these stocks subsequently decreased in value by 10% or more after joining the program. Deepexi's value decreased by 51% as of June 3.
Of 33 Hong Kong-listed stocks that joined the Stock Connect program on March 9, more than half increased by over 100% in price between their initial offering and their last trading day before inclusion. The Securities Times published an article on May 29 that discussed price increases and subsequent decreases in some Hong Kong initial public offerings.
"Many listings in Hong Kong's H shares are already traded as mainland China's A shares," Leonid Mironov, a portfolio manager at Gavekal, said. "Capital retreats to the often cheaper A shares after the stocks have joined the Connect program," he said. Ding Wenjie, an investment strategist for global capital investment at China Asset Management Co., stated that some funds in Hong Kong use Stock Connect inclusion to generate additional returns. "Low fees, weaker fundraising and intensifying competition means there has unquestionably been pressure on parts of China's financial sector," Benjamin Cavender, managing director at China Market Research Group, said. "This has probably placed a focus on short-term performance," Cavender said. Goldman Sachs downgraded Hong Kong H shares in favor of mainland Chinese A shares on Wednesday to gain greater exposure to artificial intelligence hardware.
"Share price performance is influenced by a range of factors," according to a statement from HKEX. Of 179 initial public offering listings on the exchange since January 2025, approximately half decreased in value over a three-month period. Over the same three-month period, the benchmark Hang Seng index also declined. The FTSE Renaissance Global IPO Index increased in value by more than 10% during that period.