Hong Kong still await­ing a se­ries of high-pro­file tech floats

Arab News - - BUSINESS -

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.

Bankers are hop­ing in­vestor en­thu­si­asm for Hong Kong will in­crease with the growth of tech-re­lated stocks. (Reuters)

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