BEIJING — Hong Kong may be the top market globally for initial public offerings, but it also suffers from a growing trend of weak stock performance from those debuts.

The Hong Kong exchange was first in the world by IPO funds raised last year — besting the New York Stock Exchange and the Nasdaq, which came second and third respectively — according to KPMG, which noted that strong momentum in 2025 continued in the first quarter of this year. More than 600 companies are waiting to list on the Hong Kong exchange as of Thursday, according to its website.

However, Hong Kong IPOs broadly are underperforming. Out of 179 listings since January 2025, about half have traded lower over the past three months, according to Chinese financial-data company Wind Information. That compares with a mild drop for the benchmark Hang Seng index and gains of more than 10% for the FTSE Renaissance Global IPO Index over the same period.

For those in the Stock Connect, a program which allows mainland Chinese to invest directly, the performance difference is even worse. Out of 33 Hong Kong-listed stocks that joined the Connect on March 9, over half more than doubled in price between their IPO and the last trading day before inclusion. Eight, including AI startup Deepexi, surged by more than 300% during that time.

All of the group of eight have dropped by 10% or more since. Deepexi was down 51% as of June 3.

Beijing is taking notice. State-backed Securities Times on May 29 was the latest to highlight concerns over sharp rallies and subsequent declines in some Hong Kong IPOs.

Many listings in Hong Kong’s H shares are already traded as mainland China’s A shares, noted Leonid Mironov, portfolio manager at Gavekal. Capital retreats to the often cheaper A shares after the stocks have joined the Connect program, he said.

Ding Wenjie, investment strategist for global capital investment at China Asset Management Co., said the firm has noticed some funds in Hong Kong have capitalized on Connect inclusion as a way to generate additional returns.

Goldman Sachs this spring predicted companies will raise about $60 billion this year in Hong Kong listings, nearly double the $36 billion raised in 2025. The investment firm on Wednesday downgraded Hong Kong H shares in favor of mainland Chinese A shares for greater exposure to artificial intelligence hardware plays.

Low fees, weaker fundraising and intensifying competition means “there has unquestionably been pressure on parts of China’s financial sector,” Benjamin Cavender, managing director at China Market Research Group, told CNBC. “This has probably placed a focus on short-term performance.”

HKEX said in a statement to CNBC that share price performance is influenced by a range of factors.

The next tests for the market: Knowledge Atlas Technology, the company behind AI model Zhipu, is one of the more high-profile stocks expected to begin trading in Shanghai via the Connect on Monday, while fellow AI company MiniMax is likely to join later this summer. Both companies listed in Hong Kong in January.