HAVING held the top spot for the past two years, Hong Kong is on the verge on losing its IPO (initial public offering) crown to New York this year.

While the Hong Kong exchange’s (HKEX) resistance to relax rules on shareholder voting rights still causes it to lose out on some major deals, a more than four-fold increase in technology sector IPO deal value in 2017 is a testament to the bourse’s strength, which is supported by the participation of mainland investors through the Shanghai and Shenzhen Stock Connect programmes.

So far in 2017, US$15.6 billion has been raised by companies listing in Hong Kong, down from US$24.6 billion in 2016. This compares to the US$32.6 billion raised on the New York Stock Exchange (NYSE) in 2017, according to data from Dealogic.

Hong Kong still feels the pain of losing Alibaba’s IPO to New York over three years ago. Back then, HKEX disagreed with Alibaba over local listing procedures, in particular, the dual-shares structure which is common for listed technology companies such as Google and Facebook, which allows them to keep greater control over the board of directors. As the dual-shares offering allows for unequal voting rights among shareholders, it is incompatible with the “one share, one vote” policy in Hong Kong.

HKEX has shown some willingness to reform, by proposing a third exchange targeted at technology companies. In fact, soon after Hong Kong missed out on the Alibaba deal, the HKEX held discussions with Hong Kong’s Securities and Futures Commission (SFC) about the possibility of allowing dual-shares structures. Financial hub rival Singapore is also reviewing the introduction of dual-shares, but has not set out a timeframe for when this would be decided. However, so far, Hong Kong has stuck to the “one share, one vote” rule.

Following the blockbuster Alibaba deal, the HKEX missed out on several Chinese TMT (telecommunications, media and technology) and new economy listings. However, that all changed a year ago on December 15 when Chinese photo app Meitu listed on the main board of the HKEX raising US$629 million from investors. It was the largest technology IPO Hong Kong had seen in a decade and unwittingly opened the floodgates for technology listings in Hong Kong.

Hong Kong listings in the computers and technology sector raised just US$726 million over five deals in 2016, but the year-to-date figure for 2017 now stands at a more than four-fold increase of US$3.2 billion over nine deals. This figure increases the computer and technology sector’s share of IPO fundraisings from just 3% in 2016, to 21% in 2017, according to data from Dealogic.

In 2017, HKEX saw electronics manufacturer FIT Hon Teng raise US$394 million and online insurer ZhongAn raise US$1.8 billion in their IPOs. Companies backed by large technology firms such as Ant Financial, Tencent and Foxconn Technology have opted to use Hong Kong as a fundraising hub. Just this last month, e-publisher China Literature, online car retailer Yixin Group and gaming peripherals specialist Razer all listed on the exchange. China Literature was one of the most profitable trades for investors closing 90% up of the IPO price on the first day of trading.

“This year is a game changer for the exchange. There was one year where it was becoming a dying exchange because it had previously lost out to all the new economy stocks,” says a banker from an international bank.

Although Hong Kong has attracted key TMT listings, the NYSE still captured online credit provider Qudian’s US$1.035 billion listing and search engine Sogou’s US$585 million offering.

One driving factor behind the technology listings in Hong Kong could be the maturity of both the Hong Kong-Shenzhen and Hong Kong-Shanghai Stock Connect programmes, which give onshore Chinese investors access to Hong Kong stocks, bringing the added liquidity of A-share investors as they try to gain exposure to technology names not present in the A-share market.