It's not often Hong Kong can boast hotter initial public offerings than New York, but some recent deals and a potential pipeline of big Chinese tech floats suggest a shift in the balance between the two fundraising rivals. While New York is set to top the IPO league this year, it's Hong Kong which is seeing the biggest pre-sale demand and first-day pops for new tech listings.
So far this year, the New York Stock Exchange has hosted listings worth $27.9 billion, more than double Hong Kong's $12.2 billion, according to Thomson Reuters data. But last week's Hong Kong float of China Literature , the Kindle-like e-publishing arm of Tencent Holdings Ltd, jumped 86 percent on its debut, making it the most successful first-day listing of any large company this year - far outpacing a 44 percent gain by Snap Inc, the US social media platform.
Big first-day gains have become a rarity in Hong Kong where a stream of Chinese state-backed IPOs failed to attract much interest, leaving mainland groups - which bankers dub "friends and family" - to take up most of the shares. This week, Razer Inc, backed by Intel Corp
and billionaire Li Ka-shing, gained 18 percent on its Hong Kong debut, and Yixin, China's largest online car retailing platform, ended its Thursday debut up 6 percent. While modest, those first-day gains stand out in Hong Kong where half the big deals in the past six years have ended flat or lower. In New York, 80 percent of IPOs saw a first-day pop.
Retail investors in Hong Kong have helped spur the gains, bidding for 625 times the shares initially on offer to them in China Literature's deal and 560 times for Yixin's new shares. Fund managers, too, sought many times the shares on offer in both. Bankers predict that sharp rise in interest can continue - especially for technology firms heading to market.
"Now you've had some deals go well, investor interest in Hong Kong IPOs has returned," said David Binnion, Goldman Sachs' head of equity capital markets distribution and risk for Asia excluding Japan. "There's a backlog of Chinese tech deals - notably fintech - and a growing number will look to list in Hong Kong."
The shift in sentiment comes as bankers eye a string of potential blockbuster Chinese tech IPOs in the next 18 months - of greater value than the most likely US listings.
They include Meituan-Dianping, an online local services group valued at $30 billion, and Lufax, a wealth management platform worth $18.5 billion. Top of the list is Alibaba's payments affiliate Ant Financial, which was valued at $60 billion in a funding round last year.