Investors will soon need to contend with a side effect of Hong Kong’s initial public offering (IPO) boom over the past year, as an unprecedented number of shares are expected to flood the market once lock-up restrictions expire.

Over the next 12 months, shares worth US$274 billion could potentially be freed, including those from the city’s hottest IPOs such as MiniMax Group and Knowledge Atlas Technology, according to Goldman Sachs.

Investors including SPI Asset Management said the surge in supply could weigh on prices, though it could also create opportunities for investors willing to parse metrics such as revenue growth and stock size.

The expiry of lock-ups, typically six months after IPOs, adds another layer of uncertainty to Hong Kong stocks, which have underperformed global peers due to limited exposure to artificial intelligence. Navigating these dynamics will be crucial for investors seeking to close the gap with their global and regional counterparts over the rest of the year.

“Lock-up expiry is the supply risk investors cannot ignore,” said Stephen Innes, a managing partner at SPI Asset. “Names with large share releases, especially those already sitting on big post-IPO gains, can face technical selling pressure unless fresh liquidity arrives to absorb the paper.”

Historical data does not favour stocks. Shares typically posted a median decline of 4 per cent three months after lock-up periods expired, with the downside widening to 7 per cent after six months, according to a report released by Goldman on Sunday.