Wall Street Reclaims Pricing Power in Hong Kong Secondary Offerings, Yet Foreign Underwriters Don't Support Stock Prices
Taylor Wilson
Wall Street banks swept the top three spots in Hong Kong secondary-offering underwriting in H1 2026, yet their long-term capital kept flowing out — a structural crack between underwriting presence and capital withdrawal is dragging down the secondary market.
How did Chinese brokerages lose home-court advantage so fast?
Hong Kong's SFC and ICAC launched Operation FUSE, targeting grey-channel cross-border placements run by Chinese brokerages.
CITIC Securities (中信证券) was named as a subject of investigation. Its H1 2026 IPO sponsorship slid to fourth place; secondary-placement ranking fell to ninth — just months after it topped the league table in 2025 with over HK$90 billion in total underwriting.
This means → the reversal was not market competition. Regulators hit the pause button directly.
Wuji Capital (无极资本), focused on hard-tech deals including sanctioned companies, was also swept into the probe.
How did Wall Street fill the vacuum?
H1 2026 secondary-offering league table, top three: Merrill Lynch HK$12.55 bn, CICC HK$11.65 bn, Morgan Stanley HK$11.36 bn — two of the top three are Western banks.
In CATL's latest placement, three of four global coordinator seats went to foreign houses.
In plain terms = Chinese brokerages were frozen by enforcement for several months — that window was all Wall Street needed to escape years of marginalization. The China Financial Capital Research Institute's read: foreign banks didn't get stronger; their competitors were forced off the field.
The primary market is booming — so why is the secondary market falling?
Hong Kong IPO proceeds rose 92% year-on-year, a strong headline. Yet the Hang Seng Tech Index fell 9.5% in March alone, and the short-selling ratio hit a record 28.91% in May.
This means → primary-market activity is not translating into secondary-market confidence. Money is showing up to subscribe, but refusing to stay and hold.
Over the same period Nasdaq raised US$129.3 bn in a single exchange, up more than 500% year-on-year. High US Treasury yields and US-listed AI plays are siphoning long-duration capital out of Hong Kong.
Foreign banks underwrite but don't support the stock — what does that mean for shareholders?
To close placements quickly and lock in fees, foreign underwriters tend to price at steep discounts, directly diluting existing shareholders.
Data show that nearly 30 secondary offerings run exclusively by foreign banks in H1 2026 saw their share prices fall after completion — RNE Technology dropped roughly 60%; Kingboard Laminates lost about 40%.
In plain terms = foreign banks earn underwriting fees, not portfolio returns. They have no incentive to deploy capital to support the stock post-placement. Who pays? Existing shareholders.
Can this deadlock break anytime soon?
Foreign-led pricing without post-deal support + Chinese brokerages sidelined by enforcement — these two forces stacked together form the structural bind in Hong Kong's secondary-offering market today.
On the final trading day, June 30, short-selling volume hit HK$57.52 bn, holding above the 20.5% warning line — no sign of bearish sentiment easing.
This reflects a market scanning for a single offsetting variable: whether the AI-hardware industry upcycle can sustain itself. If that thread snaps, the Hong Kong secondary market has no near-term support thesis left.
Content is for reference only, not financial advice.