HONG KONG (BLOOMBERG) - Optimism is in the air. People are lining up like ants for what might be the world's biggest initial public offering (IPO). But who says buying into Jack Ma's Ant Group is a sure win?

No doubt, the Chinese fintech giant is a rare gem, boasting enviable sales growth and profitability. Yet making money off hot IPOs is a delicate balance between margin financing and how many shares you expect to get in what can be a convoluted lottery process.

Here's how savvy retail investors in Hong Kong play new listings. They borrow as much as they can from their brokers, in order to apply for as many IPO shares as possible.

For hot listings, a good rule of thumb is that 90 per cent of an investment can be covered by margin loans - so for every US$10,000 (S$13,556) you put down, you get to apply for US$100,000 worth of shares.

But for Ant, local brokers are so certain things will go smoothly that they're offering leverage at up to 20 times. Interest on these seven-day margin loans is usually somewhere between a 2 per cent and 3 per cent annual rate. The upside, of course, is an IPO pop.

As long as the world is sane, buying quality IPOs is a no-brainer. Let's assume 90 per cent margin financing at a 2.5 per cent annual rate, and a 1 per cent IPO commission fee to the brokers. If our savvy investor can get one out of every 100 shares she applied for, she just needs the new stock to debut with a 5 per cent gain to break even, back-of-the-envelope calculations show.

But Hong Kong's IPO market has become heated, and it's anyone's guess as to how many Ant shares you could actually get. Say the allotment rate was only 0.1 per cent, or one out of every 1,000 shares applied. Our savvy investor would need more than a 40 per cent gain from the IPO price to break even.

Intuitively, if your chance of getting any shares at all is that low, the IPO lottery is a sure losing game, because all you are doing is paying brokers' fees, with no upside whatsoever.

We are already seeing some of that frenzy. In early September, Nongfu Spring, which bottles mineral water, launched the city's most popular IPO in a decade, with the retail portion over 1,100 times subscribed in its US$1.1 billion listing.

For many, the odds of winning Nongfu shares weren't great. There were 8,377 investors who each applied for HK$4.3 million worth of Nongfu shares; they ended up with only HK$12,900, or a 0.3 per cent allotment rate. As for those who put in even more money, the odds could be as low as 0.14 per cent.

Fortunately, Nongfu's shares are 68 per cent above its IPO price and most investors went home happy. Otherwise, Hong Kong's sizzling IPO market would have popped already.

Selling shares in this kind of environment is a blessing, but Mr Ma has to thread the needle. The valuation can't be too low, or he's leaving money on the table. Yet he also needs to accommodate the city's enthusiastic retail investors, who have been pushing his Alibaba Group Holding stock to record highs. Ant might start trading around the time Americans pick their next president, which could spell market volatility. Apart from where to get cheap Shanghai hairy crabs (ask me!), or when travel bubbles will be established, this IPO is the talk of town.

Next time your auntie tries to convince you that buying into Ant is a slam dunk, tell her, diplomatically, that she's attempting dumb luck instead.

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.