Hong Kong Exchanges and Clearing explores merging GEM with main board, source says

Hong Kong Exchanges and Clearing (HKEX) is considering merging the GEM board with its main board by introducing a new chapter, Chapter 18D, in its listing rules, according to a source familiar with the discussions. This proposal, which would be part of the second phase of the listing regime review, would be subject to public consultation by the end of the year.

The aim of merging GEM with the main board is to revitalize the underperforming GEM, as it currently has minimal turnover and limited new listings. The source explained that smaller companies have struggled to list on GEM due to its profit requirement, which is HK$80 million over three years. Chapter 18D would allow these smaller, newly established firms to list, potentially broadening the scope of listed companies on HKEX and improving market diversity.

HKEX has previously introduced targeted listing rules for various company types, such as pre-revenue biotech firms (Chapter 18A), special purpose acquisition companies (Chapter 18B), and large technology firms without revenue (Chapter 18C). The proposed Chapter 18D would enable these firms to meet the listing criteria, possibly helping them secure funding and contributing to the overall health of the Hong Kong economy.

HKEX's spokesperson noted that the exchange is actively exploring additional measures to enhance the listing regime's attractiveness and ensure it remains suitable for the market.