Mr. Zhao, a foreign trade executive in Shenzhen, has some spare cash he wants to invest in Hong Kong stocks. He’s heard that IPO subscriptions can be very profitable—last year, 13 new stocks more than doubled in price on their first trading day.

He was eager to open an account and get involved, but a friend poured cold water on his plans: This year, mainland regulators are really cracking down on cross-border brokerage firms, so the old trick of “just opening a Futu account” won’t work anymore.

Is it still worth participating in Hong Kong IPO subscriptions? If so, how can mainland investors get involved in compliance with regulations? This article thoroughly explains the actual process for 2026.

01

Why Is the IPO Subscription So Popular?

In 2026, the Hong Kong Stock Exchange continued last year’s “choose one of two” IPO mechanism: Under Mechanism A, the minimum public offering ratio was reduced from 10% to 5%, and the allocation ratio in the event of oversubscription exceeding 100 times was reduced from 50% to 35%; Mechanism B allows issuers to independently set the public offering ratio between 10% and 60%, with no allocation adjustment.

As the initial supply of shares dwindled, even a small amount of capital could drive up the subscription multiple significantly, and the prospect of profits in turn attracted even more investors. As of May 2026, 13 of the newly listed stocks had closed up more than 100% on their first trading day, and some AI and robotics-related stocks went on to multiply in value several times over.

However, we must also remain realistic: the rate of initial public offerings (IPOs) trading below their offering price in Hong Kong has consistently been high. In 2025, 32 out of 117 new listings traded below their offering price on their first day, resulting in a rate exceeding 27%, and this year has also seen new listings experience significant declines after going public. Participating in new share offerings is not a sure thing—it’s a game of probabilities.

02

Why the Old Path Is No Longer Viable

On May 22, 2026, the China Securities Regulatory Commission (CSRC) and seven other agencies jointly issued the “Implementation Plan for the Comprehensive Crackdown on Illegal Cross-Border Securities, Futures, and Fund Operations,” which stipulates that illegal cross-border business activities by overseas institutions will be completely eliminated within two years.

Shortly thereafter, platforms such as Futu, Tiger, and Changqiao announced in succession that, effective June 12, 2026, they would suspend all stock purchase transactions for all securities in mainland accounts and suspend transfers of funds from the mainland, retaining only selling and withdrawal functions. In other words, mainland residents’ ability to open new Hong Kong and U.S. stock accounts through these online brokerage firms and participate in initial public offerings (IPOs) has essentially been cut off.

Someone asked, “What if I just open an account in Hong Kong directly?” That’s fine, but only if the funds, identity, and the bank where the account is opened all fall within the regulatory framework—you can no longer take the gray-area route of “illegal cross-border transactions via domestic channels.”

If you’re facing a similar situation—wanting to participate in Hong Kong IPO subscriptions but held back by new regulations for cross-border brokerages, and unsure whether Stock Connect, a Hong Kong stock account, or QDII is the best option—feel free to scan the QR code to add Qicaiying’s online customer service (WeChat/Phone: 18620388671). We’ll help you choose the most compliant path based on your investment amount. Feel free to scan the QR code to contact Qicaiying’s online customer service (WeChat/Phone: 18620388671), and we’ll help you sort out this entire process from start to finish.

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03

Three Paths to Compliance: Which One to Take?

Article 1: Hong Kong Stock Connect. This is the safest channel for mainland investors; by activating the service through a licensed mainland brokerage firm, they can trade Hong Kong stocks and enjoy tax benefits on capital gains. The downside is the high entry barrier—investors must maintain an average daily asset balance of at least 500,000 yuan over the past 20 trading days—and Hong Kong Stock Connect currently does not support participation in Hong Kong IPOs.

Option 2: A Hong Kong bank card + a Hong Kong-licensed brokerage. Combining a local Hong Kong bank account with a Hong Kong-licensed brokerage (such as Interactive Brokers Hong Kong or Futu Hong Kong) creates a closed-loop system where both the account holder and funds remain overseas—this is the most mainstream ’third option” for 2026. However, for ordinary retail investors, the operational costs associated with opening an account and depositing funds in Hong Kong are not insignificant.

Section 3: QDII Funds and the Cross-Border Wealth Management Connect Program. Investors who wish to indirectly allocate assets to Hong Kong stocks but do not want to monitor the market themselves can participate through licensed products such as QDII funds and the Cross-Border Wealth Management Connect Program. These options have low entry barriers and require no hassle to open an account, but they do not provide access to new stock subscriptions.

04

The Pitfalls Retail Investors Should Avoid Most

Pitfall #1: Confusing “tax-free Hong Kong Stock Connect” with “direct account opening.” Capital gains realized through the Stock Connect program are temporarily exempt from individual income tax (a policy extended through the end of 2027), but if you open an account directly with a local Hong Kong brokerage firm, dividends are subject to 10% withholding tax and must be included in your mainland comprehensive income for tax settlement, with any underpayment to be made up to 20%.

Pitfall #2: Circumventing foreign exchange controls. Using underground money exchanges or illegal currency exchange services to move funds out of the country may constitute capital flight, money laundering, or even the crime of illegal business operations—fines are a minor concern, but criminal liability is a serious matter.

Pitfall #3: Ignoring Tax Differences. The temporary exemption from individual income tax on the transfer of A-shares is a specific tax incentive; gains from Hong Kong and U.S. stocks are not covered by this exemption. The relevant income tax rates are based on the 20% formula, and gains and losses are offset against each other within the same tax year—they cannot be carried forward to subsequent years. This means that if you incur losses in previous years, you’ll have to pay taxes in the year you finally break even and make a profit.

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05

How to Approach IPO Subscriptions

The conclusion is clear: The practice of participating in Hong Kong IPO subscriptions is still around, but the era when ’anyone could easily join in” is over; it is shifting from “mass participation” to “professional pricing.”

Investors with sufficient capital who are willing to make a trip to Hong Kong and can tolerate market volatility may opt for the compliant route of a Hong Kong bank card and a Hong Kong brokerage account; for those who just want a light allocation, Stock Connect and QDII are more hassle-free options.

No matter which path you choose, it’s much more reliable to understand the rules before placing a bet than to rely on the ’account-opening guides” peddled for 5 mao in chat groups.

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