China firms set to spearhead strong GEM listing activity
Listing activity on the Growth Enterprise Market is expected to gather pace this year as young companies - particularly from China - seek an easy way of tapping fresh capital.
Computer and communication products maker Glory Mark Hi-Tech (Holdings) cheered the GEM board when it closed with a healthy gain on its debut yesterday. Its closing price was 55 HK cents - up 27.9 per cent on its issue price of 43 HK cents.
Glory Mark is the first company to debut on either GEM or the main board this year.
A survey by consulting firm Arthur Andersen found 42 out of 57 GEM companies last year saw their share price close above their issue price on the first trading day.
However, brokers said the impressive performance of most companies was due to an over-concentration of shares in too few hands and warned investors to be cautious.
A large pool of small, young companies from China, Hong Kong and Taiwan are seeking GEM listings, with the majority from the mainland.
'It is much faster for mainland companies to get listed on GEM than on their domestic [bourse],' said Kennedy Liu Tat-yin, a partner with consultancy Arthur Andersen.
'In China, it normally takes between two and three years to get listed but on GEM most companies can be listed within six to nine months.'
Investment bankers said the lack of progress in launching Shenzhen's second board would boost GEM listing activity this year.
Hong Kong Exchanges and Clearing said 35 companies had been seeking GEM listings at the end of last year.
Of these, nine had been given the green light by the GEM listing committee.
Investment bankers said at least six companies were hoping to be listed on GEM this month.
The listing candidates include mainland advertising agency MediaNation.
