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 <0772.HK>, the Kindle-like e-publishing arm of Tencent Holdings Ltd (>> 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 (>> Snap Inc), the U.S. 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 (>> China Golden Phoenix Intnl Hldgs Ltd), backed by Intel Corp (>> Intel Corporation) and billionaire Li Ka-shing, gained 18 percent on its Hong Kong debut, and Yixin <2858.HK>, 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 U.S. 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 (>> Alibaba Group Holding) payments affiliate Ant Financial, which was valued at $60 billion in a funding round last year.
"Hong Kong is definitely going to attract more tech firms from China," said Jin Zhong, co-head of TMT at investment bank CICC. "The successes ... this year have given them confidence that Hong Kong is a good choice."
Meituan-Dianping, Lufax and Ant Financial have not commented publicly on their listing plans.
The decision each must make over where to list comes as the advantages between New York and Hong Kong become less clear-cut.
Typically, New York has offered higher valuations, a deeper pool of tech-savvy investors, a more flexible listing system that includes dual-class shares, and the prestige of being the world's biggest market.
For its part, Hong Kong boasts familiarity with China, an army of retail investors hungry for 'shoot-for-the-stars' stocks, and a convenient time-zone for Asian executives. Also, the Stock Connect schemes linking trading in Shanghai and Shenzhen with Hong Kong can build added Chinese interest once shares have listed. The links don't yet allow IPO investments.
John Hall, co-head of investment banking for Asia Pacific at JP Morgan, says the valuation argument has become less of an issue. "All deals are global now in terms of investor base, especially for Chinese deals which often attract investors from both the United States as well as Asia."
One clear difference is New York's acceptance of dual-class shares.
Just days after China Literature's Hong Kong debut, Sogou Inc (>> Sogou Inc), China's number-two Internet search engine, raised $585 million in a New York IPO, involving dual-class shares.
"Maybe in the future, Hong Kong becomes more attractive," said Charles Zhang, CEO at Sohu.com (>> Sohu.com Inc), Tencent's partner in Sogou, who talked also of U.S. investors' maturity and sophistication. "You can also list in the United States with a dual-class of shares, which was important for us."
Hong Kong is, however, poised to consider dropping its strict one-share-one-vote principle in an effort to better compete with New York for Chinese listings.
Du Yilong, managing partner in law firm Latham & Watkins' Beijing office, says that could encourage Chinese tech groups to reconsider Hong Kong.
"With regulators' encouragement and Chinese capital flowing into the city via Stock Connects, the market will gradually increase its attractiveness to Chinese tech firms and establish itself. It will be a virtuous circle," he said.
Would-be U.S. listings may also have been discouraged by how some recent floats performed there.
Best Inc (>> BEST Inc (ADR)), a logistics group backed by Alibaba, had to halve the amount it sought in September, raising $450 million, following tepid demand, and rival ZTO Express Inc (>> ZTO Express (Cayman) Inc (ADR)), which raised $1.4 billion in New York a year earlier, fell 15 percent on its debut and has since lagged its offer price.
U.S. investors can also see the attractions of Hong Kong for Chinese groups.
"You look at the entrepreneurial environment in China, there are emerging companies that need to go public," said Michael Underhill, founder and chief investment officer of Capital Innovations in Milwaukee, Wisconsin.
"Would it be suitable for them to go public on a New York exchange? Maybe, but it's easier for them to do it in Hong Kong."
(Reporting by Jennifer Hughes and Julie Zhu in HONG KONG, with additional reporting by Caroline Valetkevitch and Gregory Roumeliotis in NEW YORK; Editing by Ian Geoghegan)
By Jennifer Hughes and Julie Zhu