UBS: Foreign money is back in China IPOs, and Hong Kong is feeling it

Foreign investors are drifting back into Chinese assets, and they are not doing it quietly. UBS says the money is showing up through convertible bonds and IPOs, and that is helping fuel a fundraising rebound in Hong Kong. In the first five months of 2026, Chinese companies raised about US$43 billion through equity capital market transactions in Hong Kong, according to UBS estimates. That is up from US$28 billion in the same period a year earlier, a meaningful jump for a market that has spent years trying to shake off the chill around China exposure.

The channels matter. Convertible bonds give investors a middle ground between debt and equity, while IPOs offer direct entry into new listings. In other words, investors who may have been reluctant to buy Chinese shares outright are finding ways back in. UBS says the appeal is being driven by global investors looking for exposure to China’s artificial intelligence, semiconductor and advanced manufacturing sectors. That is a useful signal for anyone watching capital markets: the rebound is not just about trading on sentiment, but about investors trying to get access to the parts of the Chinese economy they think still matter most for long-term growth.

Hong Kong remains the key venue for that reopening. For years, the city has served as the main international fundraising hub for Chinese companies, especially when mainland listings have been harder to access from abroad. When foreign investors are active there, it usually shows up quickly in the volume of deals, the appetite for new issues and the willingness of companies to test the market. UBS’s numbers suggest that appetite has improved enough to move real capital, not just headline chatter. For executives weighing where to raise money, that is important. It suggests there is still a market for Chinese risk, but likely with more selectivity and a stronger preference for sectors tied to the country’s industrial policy and technology push.

That sector mix is doing a lot of the work here. AI, semiconductors and advanced manufacturing are not random labels thrown into a pitch deck. They are the categories that tend to attract global investors who want exposure to strategic industries, especially when those industries sit at the intersection of growth, supply chains and national competition. For Chinese companies in those areas, the fundraising environment in Hong Kong may be improving faster than for the broader market. For everyone else, the message is more cautious: capital is not returning evenly. It is hunting for themes, and those themes are clear.

Convertible bonds also tell you something about investor behavior. They are often used when buyers want downside protection with some upside if the company performs. That can make them especially useful in markets where investors like the story but want a little more structure around the risk. So the rise in convertibles suggests foreign investors may be less willing to make blunt equity bets on China, but still willing to put money to work if the terms give them flexibility. In plain English: the market may be warming up, but it has not gone back to being carefree.

The rebound in Hong Kong fundraising also matters beyond one city’s deal sheet. It affects how Chinese companies think about timing, pricing and investor targeting. If the market is open, even selectively, issuers can return with more confidence, and advisors can point to improving comparables when pitching new offerings. If the market is selective, then boards and finance teams need to be even more deliberate about structure, sector positioning and investor outreach. For executives, the UBS read is not just that capital is available again. It is that the kind of capital available is changing, and that can shape everything from deal design to valuation expectations.

For peers watching from other markets, the broader takeaway is simple. International investors are not abandoning China across the board. They are choosing their entries carefully, and they appear more comfortable doing so through products and sectors that reduce some of the friction. That matters for any company, investor or board trying to understand where global capital is willing to go next. If the trend holds, Hong Kong could stay a crucial gateway for Chinese issuers, and the companies best positioned to benefit will be the ones tied to the country’s most globally legible growth stories.