China Investors Evade Capital Controls to Buy Hong Kong IPOs (2)

It’s not hard to find reasons why cash is pouring into Hong Kong initial public offerings at a record pace: rock-bottom interest rates, frothy markets, pandemic boredom.

But one of the biggest factors behind the frenzy often goes overlooked: the growing willingness of Chinese investors to evade capital controls as regulators turn a blind eye.

Hong Kong IPOs are technically off limits to investors from mainland China, where annual foreign-exchange purchases by individuals are capped at $50,000 and residents must pledge they won’t put the money in offshore securities. While workarounds have existed for years, anecdotal evidence suggests their use ...