UBS: Foreign Capital Returns to China via IPOs and Convertible Bonds
N.R. Finch
In the first five months of 2026, Chinese firms raised $43 billion in Hong Kong equity deals — up over 50% year-on-year — with convertible bonds alone hitting $14.2 billion to become the single largest fundraising channel for returning foreign capital.
Where did the $43 billion come from?
UBS data: January–May 2026, Chinese companies raised roughly $43 billion through Hong Kong equity-capital-market transactions, up from $28 billion in the same period last year.
This means → in just one year, Hong Kong equity fundraising expanded by more than 50%, a clear step-up in foreign participation.
Two channels drove the surge: convertible bonds — debt instruments that pay interest now and can convert into equity later at a set price — accounted for $14.2 billion; traditional share placements added $9.6 billion.
Why did convertibles take the lead?
Convertible-bond issuance overtook traditional placements to become the single largest fundraising category.
In plain terms = investors want upside from China's rally but also want a bond's safety cushion — convertibles offer both.
UBS China president Hu Zhizhi noted that since the second half of 2025, falling funding costs have enabled a growing number of Chinese issuers to price convertibles at zero or even negative yields.
This means → buyers are so eager that issuers can raise money while paying virtually no interest — the supply-demand balance has tilted firmly toward sellers.
How much has foreign sentiment shifted?
Hu told a Thursday media briefing: "The conversation has moved from 'whether to invest in China' to 'how to allocate capital to China.'"
This reflects a shift from wait-and-see to active deployment. AI, semiconductors, and advanced manufacturing are the sectors drawing the most foreign interest.
Orient Securities analyst Qi Sheng added a macro argument: rising global growth risks + geopolitical pressure on dollar assets → long-term capital is expected to keep adding to China positions.
Can this inflow last?
Whether foreign money keeps coming hinges on two variables: can China's economic fundamentals deliver on AI and manufacturing-upgrade growth expectations; and will the global allocation shift continue to push capital away from dollar assets.
In plain terms = the money has arrived — that is fact. Whether it stays depends on whether the story keeps holding up.
This means → the current fundraising window is exceptionally favorable for Chinese issuers, but no window stays open forever.
Content is for reference only, not financial advice.