HKEX Explores Merging GEM with Main Board, 300+ Firms Face Uncertain Future
SingTao · 2 SOURCESabout 2 hours ago2 MIN
Summary
The Hong Kong Stock Exchange (HKEX, stock code 388) is actively studying the merger of the Growth Enterprise Market (GEM) with the main board, according to sources cited in reports dated September 22-23, 2026. The proposed plan involves adding Chapter 18D to the Listing Rules to accommodate more than 300 existing GEM-listed companies , representing the latest attempt to revitalize the struggling market that has seen zero new IPOs in both 2022 and 2023 during the pandemic period .
Key Points
- GEM was established in November 1999, inspired by the U.S. NASDAQ, positioning itself as an equal alternative market rather than a subordinate to the main board .
- Three major reforms shaped GEM's trajectory: 2008 increased minimum expected market cap from HK$100 million to HK$150 million; 2018 abolished simplified transfer procedures to the main board; 2024 reintroduced simplified transfer mechanism with only one new listing resulting .
- A "Hong Kong GEM Listed Companies Rights Promotion Association" has been formed by GEM major shareholders to negotiate better terms during the consultation period .
- Koala Financial Group (stock code 8226), a GEM company chaired by a former banker, demonstrates the sector's paradox: market cap under HK$50 million yet net asset value of HK$388 million and cash reserves of HK$77.82 million .
- The 2002 penny stock incident serves as a warning, when 577 of 761 main board stocks fell in a single day after poorly communicated delisting proposals, causing HK$10.9 billion in market cap evaporation .
Why It Matters
The GEM merger proposal could determine the fate of over 300 listed companies and thousands of investors. Given current weak market liquidity and fragile sentiment, poorly managed transitions could trigger market volatility exceeding the 2002 crisis. The outcome will signal Hong Kong's commitment to supporting small-cap growth enterprises or effectively abandoning this market segment entirely.
The GEM merger proposal could determine the fate of over 300 listed companies and thousands of investors. Given current weak market liquidity and fragile sentiment, poorly managed transitions could trigger market volatility exceeding the 2002 crisis. The outcome will signal Hong Kong's commitment to supporting small-cap growth enterprises or effectively abandoning this market segment entirely.