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Gem of a bomb waiting to explode

Let us be grateful that the bouncers at the door of the Grab Easy Money (GEM) party are still allowing access only to those small struggling entrepreneurs on the admission list.

Take Tom.com, a mighty small company indeed compared with the wealth of its backer, the Cheung Kong group. There can be no problem having it on the list. Just look at the lonely friendless struggle this little company faces to make its way in a cruel world.

Take SUNeVision, a company that seemingly couldn't even raise the money to buy itself a user friendly name as Cheung Kong did for the Tom. But that is understandable. It is backed by only Sun Hung Kai Properties. Who has ever heard of them? Take another pauper like hongkong.com. Great name but such a midget compared with its ultimate supporter, the New World group, that it may be glad GEM had no minimum height requirement for entry.

More are on their way. It seems the fourth of our four giant developers, the Henderson group, also has in mind a tiny i-stock, poor and struggling enough to be just the sort of listing candidate for which GEM was established.

So let us all rejoice that the gatekeepers are doing their jobs. This is a special market for unknowns with brilliant ideas but no access to the money that could bring these ideas to fruition. Now they can get that money. Where else could they have got it? But GEM will do even more to accommodate them. It is to begin a review of its listing rules three months ahead of schedule in order to make necessary changes.

The problem, says stock exchange chief Alec Tsui Yiu-wa, is that some listing rules are 'tougher than those in overseas markets' and are hurting GEM's competitiveness.

This may seem a little unlikely when Francis Leung Pak-to, the vice-chairman of BNP Prime Peregrine which brought Tom.com to the market, says that companies from around the region are now interested in getting a listing on GEM.

But Mr Tsui clearly has evidence at hand for his complaint. So difficult are GEM's stringent listing requirements that it has repeatedly been compelled to grant waivers from rules put in place to give minorities protection against controlling shareholders scheming to desert them once their stocks are listed.

Companies just would not come to the party any other way, you see, and thus GEM had no choice except to surrender to their demands.

We shall take it for granted that the members of the listing committee fought tooth and nail to maintain their high standards, titanic struggles you may be sure, worthy of eternalising in epic song. But it was just no use.

And they can always find reasons to console themselves. Who but an absolute cynic, when all is said and done, could possibly suggest that some people see GEM as an opportunity to ramp, stuff it and run on the wonderful ideas they bring there? What a calumny on our noble struggling entrepreneurs. Clearly some changes are needed.

Now it may strike you that there are actually two ways to deal with this unfortunate adverse publicity that GEM has attracted of dealing out waivers like a croupier deals out cards.

The first is to get rid of waivers from the rules. The second is to get rid of the rules that have been waived. Which of these two do you think the stock exchange now has in mind? Hmm, difficult question, isn't it? Real puzzler, that one. But let's be kind. It is only a review that will be speeded up. Surely this question has not been prejudged.

Let's make it plain. The World War II bomb that had to be defused in a Yau Ma Tei construction site last week was a mere firecracker compared with the one that is now sitting under the reputation of our financial markets.

We are not defusing this one.

We are still loading it with explosives and fooling ourselves that the kind of lift it will give us is really the one we want.

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