Hong Kong stock rally meets HK$193.8 billion lockup test ahead

Hong Kong’s stock rally faces a looming test, as year-end expirations of share-sale restrictions threaten to spur volatility and prompt investors to lock in gains.

A total of 28 companies that listed in the city over the past year will see selling curbs on some early investors, and others including management and controlling shareholders, expire between Wednesday (Nov 19) to year-end, potentially freeing up stock worth about HK$193.8 billion (S$32.5 billion), according to Bloomberg-calculated data based on Tuesday’s closing prices.

The hefty total reflects a banner year of listings in Hong Kong. Yet the surge also carries drawbacks, flooding the market with new shares just as momentum fades amid global risk-off sentiment and questions over valuations. The Hang Seng Index, while still up 29 per cent this year, is on track for its biggest weekly loss in a month, as Federal Reserve policy uncertainty and China-Japan tensions also weigh on sentiment.

“Lockup expirations represent a clear risk factor for Hong Kong equities before year-end,” said Ravi Wong, first vice-president at Yan Yun Family Office (HK). “It’s normal for investors to take profits after this year’s gains, whether at the stock level or across the broader market.”

Hong Kong’s listings market is on track to end 2025 at a four-year high, with proceeds potentially topping US$40 billion, Bloomberg Intelligence estimates.

The 28 companies facing upcoming lockup expirations have seen their so-called H-shares in Hong Kong climb an average of 95 per cent since listing, Bloomberg-compiled data shows. TransThera Sciences Nanjing leads the pack with a surge of about 1,430 per cent this year.

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Downward pressure is expected to be particularly acute for firms that also trade their A-shares in mainland China and whose H-shares currently command a premium, said Kenny Ng, a strategist at China Everbright Securities International.

Among dual-listed stocks, Chinese battery giant Contemporary Amperex Technology Co Limited (CATL) and Jiangsu Hengrui Pharmaceuticals continue to trade at an H-shares premium over their A-shares.

CATL’s Hong Kong-listed shares dropped as much as 7 per cent on Thursday morning after selling restrictions on some early investors in its May listing expired on Wednesday. BLOOMBERG

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