HKEx’s proposed third board draws mixed reaction from industry professionals
Proponents of the board could expand investment opportunites while critics express their concerns about its role and effect on Hong Kong’s global reputation
Opinion remains divided on the Hong Kong Exchanges and Clearing’s (HKEx) proposal to launch a third board.
Its 2016/18 strategic plan wants a third board for companies, unable to meet the profit requirements of the main board or the trading criteria of the Growth Enterprise Market (GEM).
Andrew Lam, BDO’s director and head of business development of assurance department, says if a third board is to be introduced, it will need to have a very clear and distinct positioning which should be different from that of the main board and GEM.
“For example, is this going to be a board for a different type of enterprise such as companies with weighted voting rights or hi-tech companies?” Lam asks. “Or is it just going to be a board with lower entry thresholds which effectively creates a tier-three board?” Or is this going to be an over-the-counter operation reserved for professional investors, he adds.
If properly constituted and positioned, Lam says a third board could attract new investors and new funds. “This would enrich the Hong Kong capital market and further cement Hong Kong’s position as an international financial centre,” he says.
A third board would also provide investors with another opportunity to invest in companies that are not suitable for listing on the existing two boards. Suggestions have been made that a third listing venue could host the shares of emerging companies such as those in the technology and innovation sectors.
If a third board was established, Lam says for potential candidates the main opportunity is the attraction of raising of new funds for further expansion. Also, there would be the added advantage of being branded as a listed company on an internationally renowned stock exchange.
