Hong Kong is poised to see a significant increase in share supply as lock-up periods expire for companies that went public during a surge in initial public offerings (IPOs) over the past year. According to Goldman Sachs, shares worth approximately US$274 billion could be released into the market over the next 12 months, raising concerns about potential downward pressure on stock prices.

The lock-up period, typically lasting six months after an IPO, restricts early investors and insiders from selling shares immediately after listing. As these restrictions lift, the influx of new shares could pose challenges for investors navigating Hong Kong’s equity market, which has already lagged behind global counterparts partly due to limited exposure to artificial intelligence sectors.

Stephen Innes, managing partner at SPI Asset Management, emphasized the risk posed by large share releases. “Names with large share releases, especially those already sitting on big post-IPO gains, can face technical selling pressure unless fresh liquidity arrives to absorb the paper,” he said.

Historical trends support caution, with data indicating that stocks often decline following lock-up expirations. Goldman Sachs noted a median share price drop of 4% three months after lock-ups end, widening to a 7% decline after six months.

To navigate this environment, experts recommend focusing on companies exhibiting strong fundamentals. Firms with annual revenue growth exceeding 20% and cornerstone ownership between 30% and 50% are seen as more resilient to selling pressures. Innes also advises avoiding companies where share releases exceed 30% of the total equity, as these could be more susceptible to sharp price declines.

Market capitalization is another factor investors should consider. Targeting stocks valued at HK$5 billion or more is advisable, as such companies are eligible for the south-bound trading channel under Hong Kong’s Stock Connect program. Increased participation from mainland Chinese investors through this channel may help absorb excess supply and stabilize prices.

Among firms identified as potential beneficiaries of steady post-IPO performance are AI model developer MiniMax, graphics processing unit manufacturer Shanghai Iluvatar CoreX Semiconductor, and snack and beverage producer Busy Ming. These companies have demonstrated robust revenue growth, moderate cornerstone ownership, and strong retail investor demand.

Hong Kong’s IPO market has experienced a strong rebound, becoming the world’s largest in the first quarter of 2026 with US$13.3 billion in new share sales. The total IPO proceeds reached US$37.2 billion in 2025, marking the city’s highest ranking since 2019. This resurgence reflects both the city’s expedited listing approvals for sizable mainland firms and a global shift away from U.S. assets.

Goldman Sachs projects that demand for Hong Kong stocks could exceed US$400 billion, fueled by mainland investor participation via the Stock Connect, retail buying, corporate dividends, share repurchases, and reallocations from overseas investors. This robust demand could help cushion the expected surge in supply once lock-up periods end.

Innes summed up the market outlook by highlighting the importance of timing and quality. “The best Hong Kong IPO trades will be those where growth, liquidity, and timing line up. Buy the quality growth names when the structure is clean,” he said. He also cautioned investors to “respect the lock-up wall when supply is about to hit” and prepare for a subsequent phase of increased liquidity driven by index inclusion and broader mainland access that could lead to more sustainable trading flows.