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Growth Enterprises Market (GEM) in Hong Kong

Growth Enterprises Market (GEM) in Hong Kong
(Source: GEM, HKSE)

As a gateway to Mainland China and with close trading and business links to other Asian economies, Hong Kong is strategically placed in a high growth region. Over the years, Hong Kong has developed into an internationally recognised financial centre and has provided many Asian and multinational companies with fund-raising opportunities. Growth enterprises particularly those emerging ones, i.e. enterprises that have good business ideas and growth potential, however, may not always be able to take advantage of these opportunities. A great number of them do not fulfil the profitability/track record requirements of the existing market of the Stock Exchange of Hong Kong ( i.e. main board of the Exchange ) and are therefore unable to obtain a listing. The Growth Enterprise Market (GEM) is designed to bridge this gap.

GEM offers growth enterprises an avenue to raise capital. The Growth Enterprise Market does not require growth companies to have achieved a record of profitability as a condition of listing. This removal of entry barrier enables growth enterprises to capitalise on the growth opportunities of the region by raising expansion capital under a well-established market and regulatory infrastructure. Besides the listing of local and regional enterprises, international growth enterprises can enhance their business presence and raise their product profile in China and Asia by listing on GEM.

GEM offers investors an alternative of investing in "high growth, high risk" businesses. The future performance of growth companies particularly those without a profit track record is susceptible to great uncertainty. Because of the higher risks involved, GEM is designed for professional and informed investors. It works on the basis of caveat emptor or buyers beware.

GEM provides a fund raising venue and a strong identity to foster the development of technology industries in Hong Kong and the region. GEM is opened to growth companies big and small engaged in all industries. Technology companies in particular should find it attractive to align themselves with the strong growth theme of the market. In providing a fund raising venue and a strong identity to technology companies, GEM complements and supports the HKSAR Government's initiative to promote the development of technology industries in Hong Kong.

GEM promotes the development of venture capital investments. GEM provides both an exit ground and a venue for further fund raising for investments made by venture capitalists. This facilitates more and earlier investments to be made by the venture capitalists in support of the growth of the industry.

(Source: GEM, HKSE)