Second board hi-tech target
Mainland hi-tech companies are expected to be leading participants on the soon-to-be-launched second board, stock exchange chairman Lee Hon-chiu said yesterday.
Chief Executive Tung Chee-hwa last year called for the introduction of a second board to provide a fresh market with lower listing requirements and help smaller companies raise funds.
The exchange's new market development working group, headed by Credit Suisse First Boston vice-chairman Alan Smith, is understood to have successfully devised a blueprint regulatory framework for the second board.
A consultation paper will be issued at the end of this month followed by two months of evaluation, Mr Lee said.
The second board would encourage the growth of a high-technology sector in both Hong Kong and the mainland, he said.
'I think more mainland companies than local companies will list on the second board,' he said.
Sources said the new guidelines mean companies applying to list on the second board must have a minimum capital of $50 million, lower than the main board's $200 million requirement.
Companies would need a two-year track record but would not be required to have made profits during those two years, the source said.
The main board requires a three-year profit track record.
It is understood second board companies will be required to have 35 per cent of their issued capital in public hands, higher than the 25 per cent for main board companies.
Sources said the working group had yet to decide whether small retail investors should be permitted to buy shares on the second board market as the risks are greater.
Mr Lee said he would prefer to open the second board to all investors.
'Both institutional investors and retail investors should have the right to trade on the second board,' he said.
Meanwhile, Mr Lee said a three-year strategy document for the exchange would also be released at the end of the month.
The plan will contain a wide range of suggestions for the development of the exchange over the next three to five years.
Mr Lee said one proposal was to allow the publicly owned Mass Transit Railway Corp and the Airport Authority to list.
'It would bolster total market capitalisation to double its present size in the next few years,' Mr Lee said.
'It would be up to the Government - the major shareholder of the publicly run companies to decide on whether to allow these companies to list.'
