Hong Kong in recent months has seen a string of metals and mining companies seeking listings on its bourse. This comes despite ongoing global trade tensions that have driven the city's benchmark Hang Seng Index to a 15-month low this month.

So far this year, three metals companies have made their trading debuts in Hong Kong raising HK$8.12 billion, of which Shandong Gold Mining Co. Ltd. and Jiangxi Ganfeng Lithium Co. Ltd. have shares listed both in mainland China and the city. Shenzhen-listed Tianqi Lithium Corp. and Yanzhou Coal Mining Co. Ltd.'s Australian-listed subsidiary Yancoal Australia Ltd. have also outlined plans for a Hong Kong float.

The rush to list is in stark contrast to previous years. According to data compiled by S&P Global Market Intelligence, only four metals and mining companies completed listings in Hong Kong from 2014 to 2017, and the combined proceeds from all three years amounted to only HK$1.51 billion.

China Metal Resources Utilization Ltd.'s HK$706.6 million IPO in 2014 was the biggest in terms of funds raised by companies in the sector that listed between 2014 and 2017. However, this only represented about 15% of the funds raised by Shandong Gold's H-share listing this year.

Kenny Wen, a strategist at Everbright Sun Hung Kai, said Hong Kong's popularity this year may be due to tightened Chinese regulation. "Mining companies have a high demand for M&A. But increasing regulation over capital outflow in mainland China has made it difficult for them to invest in overseas assets. Listing in Hong Kong can help them quickly solve this problem," Wen said.

Dickie Wong, executive director of research at Kingston Securities, said the recent depreciation of the Chinese yuan may have also been a factor. The Hong Kong dollar's peg to the U.S. dollar allows companies to more readily make use of the funds raised to complete overseas transactions, Wong added.

Fred Zhang, a senior portfolio manager at CSOP Asset Management, said Chinese mining companies listing in Hong Kong this year may be taking a long-term view. "Although some of the companies priced their IPO at the lower limit [this year] and the proceeds raised were lower than their initial expectation, they can still do other kinds of fundraising after their listings."

Apart from its geographical proximity, Zhang said it is also relatively simple for Chinese mainland-listed companies to list in Hong Kong, in contrast to other bourses, in terms of getting approvals from the destination stock exchange. "There are also many Chinese brokers in Hong Kong. These companies don't need to hire foreign brokers to arrange their IPOs, which can make the process of listing easier," Zhang added.

As for Yancoal Australia, which announced its dual listing plan in June, CSOP's Zhang said a listing in Hong Kong can increase its liquidity and attract more Asian capital as it is essentially a China-backed company.

Zhang said, "Yancoal Australia is already an ASX-listed company. Trading hours partly overlap between the two exchanges ... A listing in Hong Kong will mainly help it diversify its investor base."

However, analysts expect upcoming listings to receive a lukewarm response at best, as seen in the cases of Ganfeng Lithium and Shandong Gold. Earlier in October, Ganfeng Lithium saw its retail offering undersubscribed and its shares closed 29% lower on its trading debut in Hong Kong.

Ganfeng Lithium and three other companies made their trading debuts in Hong Kong on Oct. 11. Source: Jiangxi Ganfeng Lithium Co. Ltd.

Everbright Sun Hung Kai's Wen expects some companies may even delay their listing plans due to negative investor sentiment of late amid the recent dip in equity markets.

"Retail investors have recently even given up on traditional blue chips, including shares of Tencent Holdings Ltd. and HSBC Holdings PLC. For IPOs, they tend to have a short investment strategy as they are not familiar with the company's business and outlook. It can easily lead to a sharp drop for the newly listed company's share price."

Kingston Securities' Wong said investor sentiment for metals stocks in Hong Kong has not been positive.

In January, Glencore PLC withdrew its secondary listing in Hong Kong amid low investor interest. Prior to that, Vale SA canceled its secondary listing in 2016.

"It's difficult to make Hong Kong investors believe mining stocks can bring them attractive profits as they are not familiar with the industry. Investors attention for IPOs are being paid to tech companies and biotech companies this year as Hong Kong Stock Exchange's listing regime targets those companies," said Wong.