AI frenzy powers Hong Kong fundraising record

The recent fundraising boom in Hong Kong, largely attributed to AI companies, indicates a strong demand for capital within the sector despite challenging market conditions. The reported US$47.5 billion raised marks the largest haul for the July-September period ever, pushing the year's total towards the 2021 record. This suggests that investor appetite for AI remains robust, even as the broader market experiences a selloff.

A notable trend highlighted is the increased frequency with which Chinese AI companies are returning to the market for additional capital. Companies like Z.AI Co and MiniMax Group Inc, along with chipmakers Shanghai Iluvatar CoreX Semiconductor Co and Shanghai Biren Technology Co, have engaged in multiple funding rounds shortly after their IPO lockups expired. This accelerated fundraising cycle, as noted by James Wang of Goldman Sachs, reflects the rapid expansion needs in the fast-growing AI industry.

While the volume of fundraising is at a record high, the performance of these deals presents a mixed picture. Only two of the ten largest Hong Kong deals since July are currently trading above their offer price. This weak performance, coupled with expectations of further US Federal Reserve rate hikes, suggests that investors may become more selective. The current environment tests the sustainability of the intense fundraising pace, as investor confidence could wane if returns remain subdued.