Hong Kong Stocks Face Record Lock-Up Expiration Wave as Brokerages Warn

Hong Kong stocks face an unprecedented wave of lock-up share expirations as multiple IPOs from the past year reach their restriction periods, with brokerages warning of intensified selling pressure on the already struggling market. Morgan Stanley identified July and September as peak months for secondary market selling pressure, citing this as a key reason for their cautious short-term stance on Hong Kong despite stable company fundamentals. The Hang Seng Index has declined 8.9% year-to-date, while Ernst & Young data shows Hong Kong IPOs averaged 61% first-day gains in the first half of this year, potentially amplifying profit-taking pressure as restrictions lift.

Goldman Sachs Projects Record $274 Billion Lock-Up Expiration Over Next 12 Months

Goldman Sachs projects $274 billion (approximately HK$2.14 trillion) in lock-up shares will expire in the Hong Kong market over the next 12 months, representing a historical high. Based on historical patterns, stocks typically decline 4% to 7% within three to six months following lock-up expirations. Morgan Stanley's report states that selling pressure in the secondary market will concentrate in July and September, noting that these expiration events could create headwinds for market liquidity even if company fundamentals remain solid.

Zhipu AI and Two Other Companies Face Lock-Up Expirations This Week

Chinese AI developer Zhipu (02513) has 25.6 million shares ending their six-month cornerstone investor lock-up period on Wednesday, representing nearly 6% of its total issued shares. The stock has risen over 12 times since its listing. MiniMax (00100) and Iluvatar CoreX (09903) also face lock-up expirations this week, with shares equivalent to 45% and 4.3% of their respective total issued shares becoming tradable.

FAQ

What is the scale of lock-up share expirations expected in Hong Kong over the next 12 months?

Goldman Sachs projects $274 billion (approximately HK$2.14 trillion) in lock-up shares will expire in the Hong Kong market over the next 12 months, representing a historical high for the market.

How have Hong Kong IPOs performed in the first half of this year?

According to Ernst & Young data, Hong Kong IPOs averaged 61% first-day gains in the first half of this year, while the broader Hang Seng Index has declined 8.9% year-to-date during the same period.