"We Don't Want to Lose Business Across the Atlantic": London Fights Back Against Hong Kong's $27B IPO Bonanza

London's financial district is ramping up efforts to lure Chinese companies to its stock exchange as the city grapples with one of its worst IPO droughts in recent memory. The push comes as Europe's largest financial center watches Hong Kong rake in billions while London struggles to attract new listings.

Hong Kong's Success Highlights London's Struggles

Chris Hayward, who leads policy for the City of London Corporation, didn't mince words about the challenge facing Britain's capital markets. "We need to get more IPOs happening in London," he told reporters during a visit to Shanghai this week. "We don't want to lose business across the Atlantic."

The contrast between the two financial hubs couldn't be starker. Hong Kong has pulled in more than $27 billion from new share sales and additional offerings in just the first half of 2025, already surpassing the annual totals from the previous three years. Meanwhile, London has managed only four pending or trading IPOs this year, a figure that underscores how far the city has fallen behind its Asian rival.

London's stock connect program with China, launched back in 2019, was supposed to bridge this gap. The initiative allows companies from both countries to list on each other's exchanges through depositary receipts, giving investors easier access to cross-border opportunities.

But six years later, the results have been disappointing - only a handful of Chinese firms, including Huatai Securities, have taken advantage of the program, raising a combined $6.6 billion with lackluster trading volumes.

Regulatory Hurdles and Market Dynamics

LSE has been trying to make itself more attractive to Chinese companies by relaxing some listing requirements. David Schwimmer, CEO of the London Stock Exchange Group, previously indicated the exchange was looking at more flexible accounting standards to accommodate Chinese listings through Global Depository Receipts.

However, Chinese companies face their own regulatory challenges at home. China's securities regulator has tightened oversight of overseas listings, creating additional hurdles for companies looking to raise capital abroad. Some high-profile cases, like fast-fashion giant Shein, have seen companies abandon London IPO plans due to regulatory delays and pivot to other markets like Hong Kong.

Beyond attracting listings, London is also working to strengthen its position as an offshore yuan trading center. The city established a working group with China's central bank in 2018 to monitor yuan markets in the UK capital. Hayward said the authority has been encouraging global asset managers to create new yuan-denominated products to boost the currency's international use.

*Converted to USD at approximate exchange rates

Challenges at Home

London's IPO struggles aren't just about competition from Asia. The city faces domestic headwinds, including recent tax changes affecting wealthy non-domiciled residents and tighter immigration policies. While Hayward downplayed these concerns, he acknowledged they could impact London's appeal as a global financial center and urged the government to review the non-dom tax situation.

"It's important to us to try and keep wealth creators in this country," he said. In an effort to address the issue, the UK Treasury is trying to persuade Revolut, Monzo, and other major local fintechs to consider going public at home. London has been missing blockbuster tech listings for years. In 2024, chip designer ARM chose Nasdaq, following the path taken earlier by many other companies.

The London market's valuation discount compared to other global exchanges has also made it less attractive for companies considering where to list their shares. This structural challenge, combined with broader European deal drought conditions, has created a perfect storm for London's equity markets.

As Hayward heads to Hong Kong later this week for IPO discussions, the pressure is on to find ways to reverse London's fortunes and reclaim its position as a premier destination for global capital raising.