HONG KONG • Hong Kong bankers are eyeing a slew of blockbuster initial public offering (IPOs) from Chinese technology firms with a total market capitalisation of some US$500 billion (S$682 billion) over the next two years, in a sharp contrast to 2017 - the city's worst year for raising equity in a decade.
If bankers' expectations are met, it would set Hong Kong up for a showdown with New York, the traditional host for the world's hottest new-economy companies and Hong Kong's closest rival for the global IPO crown.
Companies such as smartphone maker Xiaomi and wealth management platform Lufax are among those mulling multibillion-dollar listings in Hong Kong next year, encouraged by a late-2017 rush of tech floats.
Bankers estimate Xiaomi's IPO could value the company at up to US$100 billion, while Lufax was valued at US$18.5 billion in its last funding round.
"The expectation is that over the next couple of years there is probably upwards of US$500 billion of market capitalisation, just in the tech sector in China, that could go public," said Mr Tucker Highfield, head of equity capital markets syndicate for Asia-Pacific at Credit Suisse.
Some firms will still head to New York, whose acceptance of dual-class share structures is attractive for many technology companies. Meituan-Dianping, a Chinese online platform for ordering food and booking movies, is expected to choose New York for a float that could raise US$3 billion.
But Hong Kong, the world's biggest equity capital-raising centre for four of the last 10 years, is looking to revive its appeal. This month, it announced plans to allow dual-class shares as it tries to attract Chinese tech listings.
Hong Kong raised US$32.8 billion in equity capital in 2017, Thomson Reuters data shows, the lowest since 2008 when fund-raising dried up during the global financial crisis.
Of this, IPOs accounted for US$10.9 billion, or just more than half of 2016 levels, leaving Hong Kong ranked fourth globally for 2017, behind the New York Stock Exchange, Shanghai Stock Exchange and Mumbai's National Stock Exchange.
Bankers and investors said the dominance of Wall Street in the first half of the year distracted global investors from an even stronger rally in Asian emerging markets stocks.
Hong Kong's blue-chip Hang Seng Index has gained 35 per cent this year - its best performance since 2009. MSCI's broadest index of Asia-Pacific shares outside Japan has risen over 32 per cent.
The city was also hit by the timing of some giant floats, such as an IPO of up to US$10 billion by China Tower, the world's largest collection of telecoms towers, that was expected in 2017 but is now seen happening in early 2018.
Spurring the current optimism are a series of recent hot tech floats. China Literature raised US$1.1 billion in November and jumped more than 80 per cent on its debut - the best opening pop by a big IPO worldwide this year.
"The backlog is strong," said Mr Aaron Arth, head of the financing group for Asia excluding Japan at Goldman Sachs.
"There are a number of big deals likely to come to market that are backed by strong business dynamics and exposure to China - all at a time when people are reallocating to the region."
Equity-raising across Asia-Pacific slipped 2 per cent this year to US$236.3 billion, its lowest since 2013.