Center

Reform planned for HK's GEM

By Zhang Jin (China Daily)
Updated: 2006-07-07 08:24

Under the current regulations, the GEM and the main board are operated separately. GEM players have to hire investment banks to float shares again to switch to the main board.

"An automatic upgrade regime would save them a lot of money," Hui said.

Experts believe Hong Kong needs high-quality tech firms from the outside to strengthen the GEM. And the mainland is considered the right candidate.

The city itself has a very weak technology base, said Bank of China (Hong Kong) Ltd, the investment banking arm of Bank of China.

This, along with the global IT downturn at the turn of the century, has "created an unfavourable environment for the GEM," it said in a research note.

Therefore, to turn the tables, "Hong Kong should look to the vast backyard on the mainland to court IT firms," said Cheng.

SMEs represent the most active part of the mainland's economy, and all the world's leading bourses have gone to the mainland to woo them, with innovation-oriented IT firms topping their list.

"Hong Kong cannot afford to miss this 'beauty contest' round," Cheng said.

Claiming the GEM could have a role as "the mainland's high-tech board," Bank of China (Hong Kong) believed growth enterprises in the Asia-Pacific region would be attracted to Hong Kong "once Hong Kong has established its status as the mainland's growth market."

Listing in Hong Kong would also be good for mainland high-tech companies and their overseas investors, said Vincent Chan, chairman of the Hong Kong Venture Capital and Private Equity Association.