The Hong Kong Special Administrative Region's equity capital markets activity roared back to life in the first half of 2025, driven by global investors sharpening focus on the Chinese mainland as the SAR awaits the possible Shein initial public offering in the second half.

Big ticket capital raisings and a rush of "A to H" share deals, where companies already listed on Chinese mainland markets list in the SAR, helped revive markets and led to the strongest first half since 2021.

Fast fashion giant Shein is working to list in the Hong Kong SAR before the end of the year, Reuters reported in May, citing sources with direct knowledge of the matter.

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Hong Kong's Hang Seng Index is up 21.2 percent year-to-date, making it one of the best-performing major markets in the world.

"The new era has come which is a more divided world - I think that's reality we are facing," said James Wang, head of Asia ex-Japan equity capital markets at Goldman Sachs.

"Arguably, there are more investment opportunities. It’s a structural change and there is going to be capital outflowing from the US and inflows into the Asian region."

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Across Asia, including Japan, there was a 15.3 percent increase in total equity issuance in the first half to $116.2 billion, up from $100.7 billion in the same period last year, according to LSEG data.

There were $12.8 billion of combined proceeds from IPOs and second listings in the HKSAR in the first half, up more than eightfold on the same time last year, the data showed.

Despite the Hang Seng's rally, investors remain nervous buying into IPOs as volatility continues to rack global markets.

"An A to H listing is like a follow on, there is a price benchmark, but for standalone IPOs where you don't have that price benchmark," Wang said.

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"The last round's valuation is not a benchmark. For people to feel comfortable to write a large ticket they need to get comfortable the market is there to support them, not just that they feel the valuation is OK."

Global investors buying back into  and participating in major deals like battery maker CATL's $5.3 billion listing and electric vehicle makers Xiaomi and BYD raising a combined $11 billion helped drive equity transactions, dealmakers said.

"Many global investors have reduced underweight positions and are taking advantage of capital market liquidity events to increase exposure," said Sunil Dhupelia, JPMorgan's co-head of equity capital markets for Asia-Pacific.

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Engagement from global investors on the SAR and the mainland pipeline is the highest it has been for some time, he said.

Goldman Sachs topped Asia's equity capital market league tables in the first half, ahead of Morgan Stanley and JPMorgan, the LSEG data showed.