China AI IPOs to Hold Firm Despite Valuation Concerns

Chinese Artificial Intelligence (AI) supply-chain companies are expected to continue pursuing stock market listings in Hong Kong despite growing concerns about valuations and increased scrutiny of AI-related investments, according to a senior Citi investment banker.

Simon Yuan, Citi’s head of China investment banking and head of its financial institutions group in Asia-Pacific, said Chinese companies planning to list in Hong Kong could remain resilient despite recent valuation declines among data-centre companies, particularly in the United States.

Speaking on the sidelines of the International Monetary Fund meetings in Bangkok on October 17, Yuan said Hong Kong’s IPO market continued to benefit from a combination of domestic Chinese investors and international demand. However, he warned that a broader downturn in the US AI investment cycle could affect markets worldwide, including Hong Kong.

Hong Kong IPO Market Supported by Domestic and Global Investors

According to Yuan, Chinese AI supply-chain companies seeking to raise capital in Hong Kong are supported by a relatively balanced mix of domestic and international investor demand.

The availability of local capital has become particularly important as Chinese mainland investors increase their participation in Hong Kong-listed stocks through southbound investment channels. This growing source of liquidity could help support new listings even as investors become more cautious about AI-related valuations.

Hong Kong has emerged as an important fundraising destination for Chinese technology companies seeking access to international capital markets. Its position offers businesses an opportunity to attract investors while benefiting from demand within mainland China.

However, Yuan cautioned that the market would not be insulated from developments in the United States. If the broader AI investment cycle weakens, the impact could spread across global financial markets, affecting investor appetite for technology companies and new share offerings.

He noted that volatility had increased in recent weeks, highlighting the uncertainty surrounding valuations across the AI sector.

US AI Valuation Concerns Create Risks for Chinese Listings

Recent valuation pullbacks among data-centre companies have raised questions about the sustainability of investment in AI infrastructure. Companies involved in building and operating data centres have attracted significant investor attention as demand for computing capacity has increased.

However, the capital-intensive nature of AI infrastructure has also raised concerns about borrowing costs, future profitability and whether companies can generate sufficient returns on their investments.

These concerns could influence investor sentiment towards Chinese suppliers that have benefited from the global AI boom. Although their business models and market conditions may differ from those of US companies, a broader reassessment of AI valuations could affect demand for their shares.

Yuan’s assessment suggests that Hong Kong’s IPO market has some protection through its diverse investor base, but remains exposed to international market sentiment.

Chinese Hardware Suppliers Benefit From Global AI Demand

Chinese hardware companies have benefited from the rapid expansion of AI infrastructure worldwide, according to Yuan. Suppliers have experienced growth in sales volumes as well as increases in unit prices, reflecting demand for products and components needed to support the development of AI systems.

The expansion of data centres and computing infrastructure has created opportunities for manufacturers across the AI supply chain. Companies supplying hardware and related equipment have been able to capitalise on demand from businesses investing in computing capacity.

Some Chinese hardware manufacturers have also established production facilities outside mainland China. Yuan said these overseas manufacturing operations help companies serve international customers more effectively and reduce the effects of geopolitical friction.

Having manufacturing footprints in multiple locations can provide suppliers with greater flexibility when serving global markets. It may also help them respond to changing trade conditions and customer requirements as geopolitical tensions influence international technology supply chains.

Nevertheless, continued growth will depend on global AI investment, customer demand and the ability of suppliers to maintain competitive positions as the industry evolves.

Hong Kong IPO Focus Could Shift Towards AI Models and Applications

Yuan expects the focus of Hong Kong’s equity capital markets to broaden next year, moving beyond companies focused primarily on AI hardware towards Chinese AI model developers and application businesses.

This potential shift would reflect the development of China’s AI industry from supplying infrastructure and components to building software, models and commercial applications.

Companies developing AI models and applications could attract investor interest as businesses seek practical ways to deploy the technology. However, Yuan stressed that these companies would need to demonstrate credible business models, strong growth and profitability to gain investor confidence.

His comments highlight an important distinction between the market’s enthusiasm for AI technology and the ability of individual businesses to generate sustainable financial returns.

For prospective issuers, technological capability alone may not be enough. Investors are likely to examine revenue growth, commercial adoption and the path towards profitability when assessing the value of AI-related businesses.

Hong Kong IPO Fundraising Surges in 2026

Demand from Chinese technology companies has helped drive a strong recovery in Hong Kong’s equity capital markets. A total of 118 companies went public in Hong Kong during the first nine months of the year, raising HK$388 billion, equivalent to approximately $49.4 billion.

The fundraising total represented a 106% increase compared with the same period a year earlier, highlighting the market’s appeal to companies seeking capital and investors looking for exposure to Chinese businesses.

The figures also underline Hong Kong’s continuing role as a fundraising hub for Chinese companies, particularly those operating in technology-related industries.

However, the market’s ability to maintain this momentum will depend on investor confidence, global financial conditions and the performance of companies already listed. A sharp downturn in AI-related investments could affect valuations and make investors more selective about new offerings.

Outlook for Chinese AI Companies Seeking Listings

Chinese AI supply-chain companies are expected to remain active in Hong Kong’s IPO market despite growing scrutiny of valuations. Domestic liquidity, international investor participation and demand for AI-related hardware could help support future listings.

At the same time, uncertainty surrounding the US AI investment cycle remains a significant risk. Any broader decline in technology valuations could influence investor appetite across global markets, including Hong Kong.

The anticipated shift towards Chinese AI model developers and application companies could also change the composition of future listings. Businesses seeking to attract investors will need to demonstrate not only technological progress but also strong commercial growth and sustainable profitability.

For Hong Kong, the challenge will be to sustain its fundraising momentum while adapting to changing investor expectations. For Chinese AI companies, success will increasingly depend on proving that demand for artificial intelligence can translate into durable business performance.