Opinion | Why changing GEM's listing rules may not attract giants like Alibaba
Established companies may be reluctant to rub shoulders with small second board firms
Brokers have called for the Hong Kong stock exchange to consider changing the listing rules on its Growth Enterprise Market to accommodate the special requirements of mainland companies such as e-commerce giant Alibaba.
It is a creative proposal, but it may not be the solution that some firms - those which want dual share structures that allow founders and other minority shareholders to retain control - are looking for.
Lawmaker Christopher Cheung Wah-fung told White Collar last week that some brokers thought Hong Kong Exchanges and Clearing should consider changing the GEM's listing rules to allow Alibaba to list with a special structure.
This has put the GEM, which had almost fallen into oblivion owing to its low turnover and relative dearth of listings over the past decade, back in the spotlight.
Few may remember that when the second board was set up in 1999, its mission was to be the Hong Kong version of the Nasdaq board in the United States for newly created firms to raise funds to develop their business.
In any event, the second board has not attracted many listings. Companies prefer the main board because it gives investors more confidence in them, bankers said.
The 22 listings on the GEM last year raised HK$3.15 billion, less than 3 per cent of the total HK$122.65 billion raised by the 74 initial public offerings on the main board.