【New Stock IPO】Half a Year Since the Implementation of the Rebate System: Tiger Securities Says One-Hand Traders Struggle, Funds Shift to Group B; 90% of Users Use Margin to Rush for Shares

HKEX IPO Allocation Mechanism Reform has been in effect for over half a year. Under the new system, the public offering no longer has a mandatory clawback mechanism. Tiger Securities (Hong Kong) analyzed market data and found that among the top 10 IPOs with the highest first-day gains since the implementation, 9 adopted the non-mandatory “Mechanism B,” with the highest first-day stock price increase reaching 3.6 times, sparking a citywide “New Stock Lottery” frenzy.

Tiger Securities states that since the new system’s implementation, 63 IPOs have chosen “Mechanism B,” overwhelmingly surpassing the 10 IPOs that triggered clawbacks (of which 2 chose “Mechanism A” and 8 chose 18C). However, the IPOs under “Mechanism B” have seen a sharp decline in the initial allotment success rate, now only about 1%.

Tiger Securities’ margin-based IPO subscription ratio soars to 90%, setting a record

Data from Tiger Securities shows that since the new system’s implementation, by the end of February this year, over 90% of Tiger Securities’ margin financing users subscribed to new stocks, a significant increase from about 70% before the reform. This has driven Tiger International’s total margin financing for 2025 to surpass HKD 1 trillion for the first time, setting a historical record.

Tiger Securities states that compared to the year before the new rules, when no IPO triggered clawbacks, the median success rate for one-lot allocations was as high as 50%, with a median first-day price change of 4.2%, averaging a 53.6% increase. For IPOs that triggered clawbacks, the median success rate was 17.5%, with a median oversubscription multiple of 194 times, and an average first-day increase of about 10.5%.

“Mechanism B” becomes extreme: low success rate, high profit opportunity

However, after the new rules’ implementation, data for 63 “Mechanism B” companies without clawbacks shows extreme oversubscription: the median oversubscription multiple skyrocketed to 1,091 times, causing the median success rate for one-lot allocations to plummet to 1%. Meanwhile, the median first-day price change for “Mechanism B” IPOs reached 24%, with an average increase of 53.6%. For the 8 companies that triggered clawbacks under 18C, with oversubscription exceeding 1,000 times, the median success rate was also lowered to 5%.

Tiger Securities believes that the data reflects a certain correlation between the new IPO clawback mechanism and first-day stock performance, with “Mechanism B” IPOs now perceived by the market as “low success rate, high profit opportunity” investments.

In the half-year since the new system’s implementation, the top 10 IPOs with the highest first-day gains almost all adopted “Mechanism B.” For example, the IPO with the highest first-day increase, Nobi Kan (02635), surged 363.8% on the first day, with a success rate of only 0.85%. The most competitive, lowest success rate bank, Kexin Technology (02543), also adopted “Mechanism B,” with oversubscription exceeding 7,500 times, and success rate dropping to an extreme of just 0.02%. However, a lower success rate does not necessarily mean a higher first-day increase; this stock’s first-day rise was about 14.9%.

“One-lot” strategy fails; funds shift to “Group B”

Tiger Securities points out that as the IPO mechanism changes, success rates have plummeted to near zero. The once-popular “one-lot” strategy—small-scale, cash-only subscriptions—has become ineffective. Data shows that over 90% of users participating in IPO lotteries now use margin financing, a significant increase from about 70% before the new system.

Further data indicates a strong positive correlation between oversubscription multiples and clients’ “Group B” (subscribing over HKD 5 million) participation, reflecting that the hotter the IPO, the more investors are eager to allocate larger amounts to increase their chances of success, especially given the substantial first-day gains seen in Hong Kong IPOs in the second half of last year.

Brokerages offer zero commission fees

Tiger Securities (Hong Kong) COO Wang Shan stated that after the new system’s implementation, extremely low success rates have become the norm. As traditional strategies relying solely on cash for one-lot subscriptions have become less effective, investors are increasingly turning to margin financing to concentrate their funds in “Group B.” To meet market demand, Tiger Securities offers “zero commission” for both cash and margin subscriptions. With competitive rates and strong financing support, they aim to help investors maximize their chances of successful applications. The platform will continue to provide high-quality subscription experiences and share professional market insights to meet diverse client investment needs.