Although there's been unprecedented investor demand for companies on the Chinese mainland, the biggest beneficiary has actually been Hong Kong equity markets, which soared to across-the-board highs in 2006 and attracted a wealth of IPO money.The total market capitalization of Hong Kong's stock exchange recently hit an all-time high of HK$12.72 trillion, or $1.64 trillion. Hong Kong's largest index, the Hang Seng, reached an all-time closing high of 19265.32 on Nov. 23 this year. In total, HK$471.29 billion, or $60.6 billion, of new capital was raised on the stock exchange in 2006, up 158% over last year. "Hong Kong is well-positioned for next year, and there's still a lot more diversification and investment gains to come out of the markets there," says Justin Urquhart-Stewart, a director of Seven Investment Management, which invests in Chinese companies on the Hong Kong and Shanghai stock exchanges. However, the effects of a weakening greenback and instability in the region still remain to be seen. The largest and most recent end-of-year initial public offering, China Coal Energy, raised HK$1.69 billion, or $217 million, last Tuesday, ending the day at HK$4.56, up 13% from its listing price. This was well below the performance of other Chinese mainland IPOs in Hong Kong this year, all of which rose more than 29% from their listing prices on their first day of trading. Still, Hong Kong overtook the New York Stock Exchange as the place to go for new listings this year, with IPOs there raising a total of $35.37 billion against $33.61 billion on the NYSE, fueled by the public listings of China's big banks. China's Industrial and Commercial Bank raised a record HK$124.95 billion this year, or about $16 billion; Bank of China raised HK$86.74 billion, or $11.15 billion; and China Merchants Bank raised HK$20.69 billion, or $2.67 billion, on the exchange this year. These three offerings alone make up three of the top 10 largest-ever IPOs in Hong Kong. Hong Kong has been the chief beneficiary of growth in the Chinese economy, says Urquhart-Stewart, because for investors looking to cash in on the big gains of the large Chinese state-owned company IPOs, it's a safer place to invest than on the mainland's exchanges. "There's been more coming through the Hong Kong method of fund raising really because there's tighter regulation, less corruption and ultimately more control," he says. "We prefer to invest in Hong Kong rather than in Shanghai directly," he adds. Just $12.17 billion was raised on the Nasdaq this year, but that number, combined with the NYSE's IPO funds raised, still leaves New York in second place, ahead of Hong Kong, with a total of $45.78 billion of IPO funds raised in 2006. London remains the world's IPO hot spot, with $48.93 billion raised on the city's exchanges this year, some of that coming from Chinese company dual-listings.