Hong Kong Securities Body Warns GEM-Main Board Merger May Drive Away Startups
On.cc · 1 SOURCESabout 2 hours ago4 MIN
Summary
The Hong Kong Securities and Futures Professionals Association has issued a strong warning against merging the Growth Enterprise Market (GEM) into the main board, arguing such a move would effectively push away startups seeking affordable listing pathways. Association president Chan Chi-wah (陳志華) contends the fundamental problem is not GEM's existence but rather the disproportionate compliance costs imposed on small enterprises. With only two new GEM listings against 102 main board listings by end of July, Chan advocates for a differentiated listing framework modeled on Nasdaq's tiered system, with lightweight compliance standards specifically designed for Chapter 18D companies.
Key Points
- GEM board had 306 stocks with combined market capitalization exceeding HK$74 billion as of July 2026
- Only two companies listed on GEM by end of July, compared to 102 on the main board during the same period
- Main board compliance requires stricter ESG disclosure, corporate governance standards, and legal responsibilities to public investors
- Chapter 18A covers biotech giants while Chapter 18C targets large specialized tech companies, leaving small enterprises without suitable framework
- Chan proposes exempting certain complex internal control reporting for companies below specific market capitalization thresholds
Why It Matters
Hong Kong's startup ecosystem faces a critical juncture as the city's exchange weighs GEM reform options. If the proposed merger proceeds without creating a proportionate compliance pathway for small enterprises, the financial hub risks losing its competitiveness in attracting early-stage companies that typically fuel long-term economic innovation and job creation in major global markets.
Hong Kong's startup ecosystem faces a critical juncture as the city's exchange weighs GEM reform options. If the proposed merger proceeds without creating a proportionate compliance pathway for small enterprises, the financial hub risks losing its competitiveness in attracting early-stage companies that typically fuel long-term economic innovation and job creation in major global markets.