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Following is the full text of the speech delivered by the Financial Secretary, Mr Donald Tsang, at the launching ceremony of Growth Enterprise Market today (Monday):
Mr Lee, ladies and gentlemen,
I have great pleasure today to be invited to officiate at the launch of the Growth Enterprise Market (or GEM) of the Stock Exchange of Hong Kong.
GEM provides an alternative avenue for emerging companies to raise funds for business development. The stated mission of GEM is to become a successful stock market in its own right known for its quality, level of transparency, level playing field, orderly transactions as well as investor protection. It targets at growth enterprises from all industries and of all sizes, with the objective of allowing these enterprises easier access to capital.
The creation of a second market in Hong Kong has not been an easy task. The concept was first mooted in 1987. Since then, there has been much debate on its need and functions as a separate trading platform. The hard work of the Stock Exchange and the Securities and Futures Commission has eventually borne fruit, and we are here today to witness the launching of this new market. Today marks an important milestone in the further development of Hong Kong as an international financial centre.
I understand that the Exchange has already admitted more than 30 firms as approved GEM sponsors and received nine formal listing applications. This is encouraging. I am sure that the Exchange will keep up the good work and develop GEM to its full potential before too long.
GEM will benefit not only the emerging enterprises in Hong Kong, but also those in the Mainland, in the region and elsewhere in the world. It caters for any young enterprise in need of capital for business expansion or trying to gain a foothold in the Asian capital market. I am pleased to note that there has been keen interest from Mainland companies to list on the second market. With the establishment of GEM, Hong Kong plays an even more important role as the major fund-raising centre outside Mainland for Mainland enterprises. For this purpose, the SFC and its Mainland counterpart have recently exchanged letters to ensure that there will be close cooperation in all regulatory matters arising from Mainland enterprises being listed on GEM.
A successful GEM will help attract venture capital to Hong Kong. Venture capitalists are more interested in investing in the seed, start-up and early expansion stage of a company, with an eye on higher rates of return. For venture capital to grow in a market, there must be an efficient exit mechanism for unloading investments in growing companies. GEM will meet this requirement.
GEM also gives retail investors a new opportunity to invest in rapidly growing companies and to share the profits of their success. In this regard we are mindful of the need to promote a better understanding among investors in this market. Our efforts should focus in particular on investor education as to the nature of the new market as well as the higher levels of risk associating with it.
The birth of GEM owes much to the hard work and perseverance of many public spirited people. My warm congratulations go in particular to Dr. K S Lo, chairman of the Stock Exchange's Working Group on GEM and members of the Working Group, for having turned this decade-long mission into reality.
A market takes many years to build and even longer to mature and consolidate. I have no doubt that the leadership and management of the Stock Exchange and in future the Hong Kong Exchanges and Clearing Limited will continue to make their best efforts to ensure that GEM will be as successful as the Main Board and one of the most appealing homes in Asia for the most ambitious enterprises throughout the world. Let me wish the new market every success in the future.
Thank you.
End/Monday, November 15, 1999
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