Goldman Sachs: Hong Kong Stock Market May Face Over HK$2 Trillion Share Unlock Wave

Odaily Planet Daily News Goldman Sachs stated that as IPO lock-up periods gradually expire, the Hong Kong market may face an additional supply of approximately US$274 billion (approximately HK$2.13 trillion) in new shares over the next 12 months. It is expected that strong stock demand will be able to absorb this influx of supply. Goldman Sachs' report pointed out that dual demand from passive index funds and southbound capital constitutes an important liquidity buffer, effectively alleviating the selling pressure caused by the expiration of locked-up shares.

Historical experience indicates that within 3 to 6 months after the lock-up expiry, stock prices typically experience a modest decline of 4% to 7%, while returns show significant divergence. Short-term performance after the lock-up expiry is primarily determined by the ratio of unlocking shares to total share capital, whereas medium-term returns are structurally driven by the post-unlock free float ratio and the stock's performance prior to the lock-up expiry. Companies with a higher proportion of cornerstone shareholding, especially those held by domestic cornerstone investors, tend to face greater selling pressure after the lock-up shares are unlocked. (Jin Shi)