Hong Kong's Record Profits Mask Growing China Dependence

The Hong Kong Exchange just posted record-breaking earnings for 2025. But the real story isn't in the numbers—it's in who's driving them.

The Mainland Money Machine

HKEX announced stellar results Thursday, with revenue and profit hitting fresh records. The exchange facilitated 119 listings last year, raising the largest amount of funds since 2021. Trading activity surged, fees poured in, and Hong Kong's government finally escaped its string of budget deficits.

But here's the catch: this boom is largely powered by mainland Chinese investors and companies seeking dual listings. What was once Asia's independent financial gateway is increasingly becoming Beijing's offshore funding arm.

Is this transformation a strategic evolution or a dangerous dependence?

Winners and Losers in the New Game

Investment banks are celebrating. IPO fees are flowing like champagne at a Wall Street party. Hong Kong's government is breathing easier—those years of budget deficits are finally behind them.

But individual investors face a different reality. Many of the 119 newly listed companies are either mainland Chinese firms or heavily exposed to China's economic cycles. When Beijing sneezes, Hong Kong catches a cold—and your portfolio feels it.

For global investors, this creates a paradox. Hong Kong offers access to Chinese growth stories, but with that comes exposure to regulatory uncertainty and geopolitical tensions that can shift overnight.

The Sustainability Question

Hong Kong's success story is also a story of structural change. The city that once prided itself on being a bridge between East and West is now more like a tributary of the mainland Chinese financial system.

This isn't necessarily bad—mainland appetite for Hong Kong listings shows no signs of slowing. But it raises uncomfortable questions about resilience. What happens when China's economy hits turbulence? We've already seen glimpses with companies like Country Garden facing winding-up proceedings.

Meanwhile, Singapore is aggressively courting Southeast Asian companies, and US exchanges remain the gold standard for global IPOs. Hong Kong's record year might be impressive, but the competition is heating up.