The Alibaba Group's decision to choose the US over Hong Kong for its initial public offering has undoubtedly dealt a heavy blow to the city.
The decision hinged around the company's shareholding structure, which gives its partners the right to appoint the majority of board members. This goes against Hong Kong's "one shareholder, one vote" rule, which meant there could be no listing on the Hong Kong stock exchange without a change to existing rules.
In order to keep pace with market changes and maintain the city's competitiveness as an international financial hub, the stock exchange has been conducting a review of its current rules.
Despite the Alibaba loss, many in the investment sector believe Hong Kong should not surrender its principles just for quick monetary gains and investment fads. They said the exchange was right to reject Alibaba's listing and not give it any special treatment.
I agree with Martin Wheatley, chief executive of Britain's Financial Conduct Authority and former chief of Hong Kong's Securities and Futures Commission, who said: "No matter how difficult it would be to lose a very high-profile company to list, it is important to keep the principle to protect shareholders' interests.
"The SFC has done a good job in doing it."
Nevertheless, with rapid changes in the investment market and global development of capital markets, Hong Kong needs to move fast to keep pace, to maintain its competitiveness.
We have to accept that Alibaba's decision was a lost opportunity for us; we missed the boat as far as securing its lucrative IPO - estimated at HK$100 billion - is concerned. However, one tree doesn't make a forest, and we must not in the long run allow ourselves to lose the entire forest.
We need to review our existing position, study the Alibaba case and learn from this experience.
The listing systems on the mainland, and in the US and Hong Kong, all have their advantages. Generally speaking, the US and Hong Kong rules ensure limited vetting, with the focus mainly on full disclosure and post-listing monitoring.
On the mainland, because of the widespread participation of small investors, the monitoring authority is forced to vet any proposed listing more closely. As a result, the process is far more stringent.
Still, the reality on the mainland is that, if you have strong backing and networks, an IPO is always possible. However, the current trend is for mainland companies to list in places like Hong Kong and the US.
Moreover, it's comparatively easy to get listed in America, where the rules are more lax, especially for the information technology sector.
However, problems may surface after a listing in the US, given that the monitoring authority has very stringent regulations. Multinationals such as HSBC and Merrill Lynch have been fined billions of dollars following regulatory disputes. Local banker David Li Kwok-po agreed to pay US$8.1 million to settle insider trading allegations in the US.
When it comes to listing rules, the level of control in Hong Kong is somewhere in the middle and rather attractive to companies seeking IPOs. Over the past decade, Hong Kong has ranked in the top five as a preferred choice for companies as well as for the total capital raised in IPOs.
As an international financial hub, it's important that we maintain our rules and regulations, but that doesn't mean we can't make adequate changes to move with the times.
Concern over the Alibaba saga has been voiced by Lo Ka-shui, former chairman of the GEM (Growth Enterprise Market) Listing Committee. He said that, in the long run, Hong Kong, as a popular IPO market for mainland enterprises, would regret this missed opportunity.
He called on the authorities to change existing listing rules, or risk losing the IT sector on the stock exchange.
He suggested that the city should invite big mainland IT companies to list on Hong Kong's GEM.
I agree we need to breathe new life into the GEM, which has been quiet for a while since its inception in late 1999. It has turned into a secondary market, instead of serving its original purpose of supporting new enterprises by encouraging capital-raising.
China's IT sector has evolved and changed drastically over the past few years. So, in order to attract companies in the new economy to list here, we need to maximise the advantages of the GEM. It would not affect our listing principles, and at the same time would increase our competitiveness.
We have learned an invaluable lesson from the Alibaba saga; let's make use of this opportunity to reassess our current position and optimise our various advantages. If we want to keep afloat in this competitive market, it's vital that we don't miss the boat again.
Albert Cheng King-hon is a political commentator. email@example.com