HONG KONG, June 1: Hong Kong is proposing a second market for emerging companies, a move analysts predict will breathe new life into an initial public offering market that has suffered from a severe stock market downturn."There is no doubt about it," said Louis Koo, head of HongKong and China corporate finance at ABN AMRO Asia Corporate Finance Ltd."It provides a venue for companies that do not qualify for a main board listing. If Hong Kong wants to develop into an international finance centre, this is the right direction."
The Stock Exchange of Hong Kong released a consultation paper last Thursday proposing a new market for emerging companies. The second market would be an alternative to the main board and its top objective would be to provide capital formation for emerging companies, the exchange said.
"The exchange should provide as many different opportunities as possible for smaller companies to raise funds," Koo said.
"Companies which are in the developing stage would benefit the most becausethey would have access to additional funds in addition to their bank lines, so the underlying objective is to speed up the pace of development of these companies," Koo added.Companies on the second board may attract venture funds, analysts said. However, the small size of the companies, a lack of participants and possible liquidity problems in the market could deter some institutional investors, they added.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
