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Hong Kong Exchanges and Clearing Limited (HKEX) - Growth Enterprise Market (GEM) Features Summary

Introduction

The GEM market was established to provide a listing platform for smaller, high-risk growth companies. Investors should be aware of the elevated risks associated with investing in these enterprises, including potential price volatility and liquidity concerns.

Key Characteristics of GEM

1. Target Market Segment:

   • Catering primarily to smaller and growth-oriented companies deemed unsuitable for the main board, reflecting their higher operational and financial risks.

2. Investor Risk Awareness

   • Price Volatility: GEM-listed securities may exhibit greater price fluctuations compared to those on the main board.
   • Liquidity: Lower trading volumes are anticipated for GEM-listed shares, potentially making them less liquid.
   • Listing Basis: Companies must meet basic financial thresholds (e.g., minimum market capitalization or turnover) to qualify for listing.

3. Listing Requirements
   Based on the Hong Kong Listing Rules, GEM-listed entities must meet specific criteria outlined in the prospectus, including disclosure prerequisites and corporate governance standards.

Compliance and disclosures

• Listing Compliance: GEM-listed companies must adhere to specific listing rules, ensuring appropriate disclosures and operational transparency practices.
• Risk Management: Companies are expected to implement robust risk management measures and internal control systems to ensure stable operations.

The GEM market provides an avenue for smaller enterprises seeking capital access while urging potential investors to perform due diligence, emphasizing inherent risks in these high-growth businesses. Further details regarding listing requirements, compliance, and risk management can be obtained from the prospectus and the Listing Rules.