New | Roller coaster ride exposes Hong Kong GEM’s weaknesses
With four issuers on the Growth Enterprises Market board shot down by regulators, should one expect Hong Kong’s farmers of corporate shells and price fixers to be in mourning?
Not at all. It’s business as usual. They say wherever there’s a rule, there’s a way. The name of the new way is Patience.
The story of version 2.0 is best told through the IPOs of two GEM-listed stocks within a week of each other last month.
The duo are typical of the second board, exhibiting various red flags of a listed shell as defined by the Hong Kong Stock Exchange - small fund raising, minimal market capitalisation and deteriorating profit.
Both launched their share sales within days of a January statement by the Securities & Futures Commission and the Hong Kong Stock Exchange threatening to block stock listings in the case of bogus share allocations.