The new Growth Enterprise Market (GEM) is expected to open up new opportunities for high technology and small and medium enterprises, as well as the securities industry at large, but would be subject to the same controls as the Main Board [Shanghai Stock Exchange].

 

 

 

 

 

 

 

 

 

 

 

 

The China Securities Regulatory Commission (CSRC) issued interim measures March 31, paving the way for the Growth Enterprise Market (GEM) to come into being with effect from 1 May 2009.

 

After a decade of uncertainty, GEM, a growth-oriented stock market that will serve purposes similar to those of America's NASDAQ, is finally ready to come into being.

 

The move is seen as a major achievement on part of regulators as finally a "multi-layer capital market" will take shape in China too. Regulators are determined to make a success out of it and the move is being seen as an important step towards using capital markets to support development of innovative enterprises, as well as small and medium businesses.

 

Venture capital firms and major securities firms are upbeat. In China, new capital market innovations have traditionally signalled a redistribution of activity. After the A-Share market plunged from 6,000 to 1,600 points, it has recovered only to a level of around 2,600. Now hopes are pinned on the GEM, which is expected to boost business prospects for capital market players.

 

In the midst of this optimism, there are some worried voices too. "The development path chosen by the GEM will determine the future of this market," a senior market insider told Caijing. "The rules that have been drafted so far don’t make the GEM's future look too bright."