TRADING volumes on the Hong Kong stock exchange are not under threat from listings abroad, according to a merchant bank attempting to make US listings available even to relatively small Hong Kong companies. Dan Carroll, managing director of H&Q Asia Pacific, says such listings ''lead to a substantial increase in trading in both exchanges''. The unit is a subsidiary of Hambrecht and Quist, a specialist investment bank known for bringing small but fast-growing US technology and healthcare companies on to the NASDAQ over-the-counter trading system. Its newly established Hong Kong office aims to do the same for companies in Hong Kong and China. He said US investors were ''looking for growth stocks and have run out of ideas in the US''. Last month the company created a listed American depositary receipt programme for Great Wall Electronic International, a locally listed electronics group, which raised US$24.4 million by increasing share capital by 15 per cent. Great Wall is about the 170th largest company on the Hong Kong exchange. There have been fears that many more small companies will take US listings. Mr Carroll said such listings would be viable for raising as little as US$20 million. In the mid-1980s it had arranged a public flotation for a US company which raised just US$7 million. Although many local companies have ADR programmes, Hongkong Telecom is the only one with listed securities and which raised money using the ADR offering. ADRs also qualify as full US securities for US investors unable to invest in markets overseas. However, because they are still linked to the Hong Kong securities, they cannot be priced at high US-style price-earnings multiples. Despite this, Mr Carroll said the costs were worth paying in the long run for access to the deep pockets of US investors and the legitimacy gained among US suppliers and customers. In Great Wall's case, the costs of the programme amounted to nearly US$3 million, perhaps twice the cost of a local issue. He said US-listed ADRs could be used for all-share takeovers in overseas markets. Great Wall management toured 13 US cities as part of a roadshow to sell the deal to investors. It will have to prepare extra accounts to US general accounting principles. ''This is not a tedious process,'' Mr Carroll said. Companies do not need to move on to quarterly reporting, which is the US norm. He also said such listings required ''significant commitment'' after the listing, both by the company management, which must remain accessible to outside investors, and by the sponsor, which must keep up research on the company. He said Great Wall now had five or six market-makers in the US trading the stock.