China’s ‘AI tigers’ are making waves in Hong Kong’s IPO market, with MiniMax having an outstanding debut by doubling its value. The demand for MiniMax’s shares was enormous, with oversubscriptions exceeding 1,159 times, showing a strong interest fueled by the ongoing AI boom, similar to what Wall Street has seen. Following Zhipu’s 16% jump on its IPO, several AI-focused companies from China are attracting attention. Firms like Moonshot AI and Baichuan Intelligence are offering competitive pricing on AI models, capturing global interest because of their cost-effectiveness.

Challenges and Opportunities in the AI IPO Market

Despite the strong interest, companies like MiniMax are facing challenges, including reported operating losses. For instance, MiniMax reported a $512 million net loss over nine months, while generating only $53.4 million in revenue, driven significantly by its international market presence. China is pushing for AI to be integrated into its industries, as highlighted by the ‘AI+ Manufacturing’ policy. This initiative could help companies like MiniMax and Zhipu offset short-term losses and strengthen their position as global leaders in AI. The interest in low-cost Chinese AI models is rising, and access to Hong Kong’s market is improving internationally. However, caution is necessary, as previous market exuberance in sectors like electric vehicles hasn’t always led to success. After MiniMax’s impressive IPO, which saw its stock double, there is high implied volatility in the derivatives market for these new AI companies. This indicates that options on stocks like MiniMax (0100.HK) and Zhipu (2513.HK) are costly, reflecting the market’s expectation of significant price fluctuations in the near future. The 1,159 times oversubscription for MiniMax highlights a strong retail frenzy that derivative traders can leverage.

Market Volatility and Strategic Approaches

Given the severe price movements, strategies that capitalize on volatility, like long straddles or strangles, may be worth exploring, although the high premiums can be a hefty cost. For those who are bullish, the strong upward trend is bolstered by new government initiatives like the ‘AI+ Manufacturing’ plan, which aims to enhance the sector. Data from the China Academy of Information and Communications Technology (CAICT) showed a 45% surge in enterprise AI adoption in the last quarter of 2025, creating a favorable environment for buying call options on these industry leaders. However, we shouldn’t overlook the significant operating losses, with MiniMax losing $512 million against just $53.4 million in revenue up to September 2025. This underlying weakness suggests that the current excitement might wane, potentially leading to a chance to profit from put options as a correction occurs. A similar situation unfolded in the Chinese EV sector in 2023 when initial enthusiasm faded to a severe price war and stock declines as the market became saturated. The excitement is also boosting the entire Hong Kong tech sector, with the Hang Seng Tech Index rising over 8% year-to-date, driven largely by these AI IPOs. This increase has led to higher options volume in established companies like Alibaba (9988.HK) and Tencent (0700.HK), as traders use them as more liquid proxies to tap into the broader AI trend. This strategy allows for sector exposure without the risks associated with trading newly listed stocks that lack a profitability history. Looking ahead, it’s essential to watch for the IPO filings of other AI tigers, such as Moonshot AI and Baichuan Intelligence. The pricing and timing of these IPOs will likely serve as key drivers of volatility across the Chinese tech scene. Monitoring index derivatives as these events approach could be a wise strategy to engage with the overall sector momentum. Create your live VT Markets account and start trading now.

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