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HKEX plans third new board for new economy firms

HKEX plans third new board for new economy firms

HONG KONG: Hong Kong may have a brand new market next year for “new economy” companies, allowing companies ranging from start-ups and technology firms with dual share structure to list, according to a consultation paper by the Hong Kong Exchanges and Clearing released on Friday. The proposal, announced in the paper to collect views over the next two months, recommends that the new board will not accept any traditional or old economy firms, but only those classified as technology or new economy firms to list. This will be the first market in the world that restricts the types of companies allowed for listing.

Hong Kong has a main board which currently requires companies to make a combined profit of HK$50 million (US$6.42 million) in the three years prior to the listing. The second board Growth Enterprise Market does not require a profit track record but companies have to have HK$20 million in annual cash flow. Neither the main board nor the GEM has attracted many technology firms to list. Of the HK$19.4 billion raised by initial public offerings in the city last year, 69 per cent was accounted for by financial firms, with just three per cent from technology companies, far lagging behind the New York Stock Exchange, Nasdaq and Shenzhen’s ChiNext.