Hong Kong still awaiting a series of high-profile tech floats
But bankers are confident that Hong Kong will soon reassert itself.
“The second half of the year is looking very robust. Notwithstanding the recent market volatility, the second quarter of this year is going to be much busier than usual, too,” said Bruce Wu, co-head of Citigroup’s Greater China equity capital markets group.
Hong Kong has a lot riding on expectations of a pick-up in IPOs. Rule changes due in the second quarter will overturn the city’s long-held one-share-one-vote principle, ushering in the ability to weight voting rights in favor of company founders.
In theory, the changes should allow the city to better fight back against New York, its closest rival in the battle for the biggest Chinese tech listings. Many companies have to date opted for New York, including Alibaba, precisely because the US has long allowed weighted voting rights.
“This year will definitely be a huge year for Hong Kong IPOs,” said Li Hang, head of Greater China equity capital markets at CLSA.
“There are a lot of companies that are rushing to go, or hoping to get listed as early as possible. Before, their only choice is the US market, but now they are really thinking about Hong Kong.”
Among those expected to list in Hong Kong are Xiaomi, the Chinese smartphone and appliances maker which is seeking a valuation of up to $100 billion, and Lufax, the online wealth management platform backed by Ping An valued at $18.5 billion in 2016.
For bankers, the prize is not simply wresting the crown of leading capital-raising center from New York again. They are also hoping investor enthusiasm for Hong Kong will increase after the territory was dominated for years by the floats of state-owned Chinese groups that few foreign fund managers were interested in.
“When you look at the current listed universe in Hong Kong, it still has an old-economy, financial bias to it. If we get a lot of volume coming through with tech-related, growth-type stocks, it should transform the market into a more interesting space with greater institutional involvement,” said David Binnion, Goldman Sachs’ head of equity capital market distribution and risk for Asia excluding Japan.