Dozens of Taiwan companies are said to be in line. And in China, interest among mainland companies is so high that five seminars to explain the new exchange have each drawn 500 visitors. GEM's timing seems impeccable. While the Internet investment craze may be abating on Wall Street, it is just beginning to swell in Asia. As an exchange for technology companies, the all-electronic bourse should boost Hong Kong's chances of fending off competition from other regional financial centers such as Singapore and Shanghai.
GEM faces challenges.
Also, policing a market with lots of zippy startups will test regulators, given Hong Kong's taste for speculation. Aware of past scandals involving Chinese companies that listed on Hong Kong's main board, GEM admits there is potential for funny business. So GEM's disclosure rules require swift publication of financial statements, and companies must report how closely they are following business plans. That's more than the Stock Exchange of Hong Kong asks. But GEM won't make companies show they are profitable prior to listing.