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HK: GEM Lures High-tech Companies from Beijing
Dozens of high-tech companies in Beijing's Zhongguancun, known as China's silicon valley, are preparing to go public at the Growing Enterprise Market (GEM) in Hong Kong later this year, said an official with the Ministry of Science and Technology (MST).
Redflag will be one of the mainland companies seeking a listing in Hong Kong for a growth leverage. The company, which produces the domestically-developed computer operational system Linux, has vowed to take back the Chinese market occupied by Microsoft's Windows system.
There are more than 5,000 high-tech companies, most of which are privately owned, in Zhongguancun, according to official statistics.
Despite the sluggish performance of Hong Kong's second-board market, the companies will not wait long, said Zhang Jing'an, director of the Torch High-Tech Industry Development Centre under MST.
"Actually it's not a bad time to go public when the high-tech sector kept plunging in the world stock market as well as the GEM, because it is also a time when the market gets sorted out and the companies are much more cautious," he said.
"It will be good for the companies in the long term," he added.
Zhang's remarks were made during a forum held in Beijing last weekend by Hong Kong Exchange and Clearing (HKEx) aimed at attracting more potential mainland candidates for a listing on Hong Kong's GEM, a second-board market mainly for high-tech start-ups.
Richard Peng, senior vice-president of China and International Development at HKEx, admitted that the GEM had not been so satisfying since it started in late 1999.
However, the situation in Hong Kong's second board was not so bad as its counterparts in many other places, he said.
The timing of the creation of the GEM index seemed to have been unlucky -- the index started on March 17 last year, and three days after, the Nasdaq index came to a free fall, and the world followed.
Analysts said the small scale of the GEM had made it vulnerable to any impact of the world market.
To date, GEM has listed 60 companies from Hong Kong and the Chinese mainland, and the total investment it has introduced amounts to HK$18.1 billion (US$2.32 billion).
But the HK$340 million (US$43.59 million) daily trade volume is a rather small number, only around 1 or 2 percent compared with the major Hong Kong stock exchange, said Peng.
The GEM is aiming to have more companies from the mainland.
Inviting about 100 Zhongguancun companies to the forum, the HKEx sent out legal and accounting agencies and financial guarantors to introduce the details as to how to apply for listing on the GEM.
Not all the companies have been performing so bad, said the HKEx, naming a few models such as Phoenix TV, Beida Jade Bird Universal and Shanghai Fudan Microelectronics. The latter two are well-known mainland software and integrated circuit developers.
After all, the second-board market in Hong Kong is an ideal means to put the company into the sight of world investors, said Zhang Jing'an.
Besides, the strict and regular operations of the market will streamline the operation of a company so as to fit into fierce competition, he said.
Insiders have predicted that, after several years of preparation, the long-awaited second board in Shenzhen will open by the end of this year.
Zhang believed that the Hong Kong and Shenzhen boards will complement each other.
Source: chinadaily.com.cn
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