A. The GEM market is also commonly known as the second board market, that is, the second trading market for stocks. The "second" here is relative to the main market.

In foreign countries, the second board market is also called the alternative stock market, which is a market for small and medium-sized companies, emerging companies, especially high-tech companies to go public. The main function of the second board market is to serve small and medium-sized entrepreneurial enterprises, especially small and medium-sized high-tech enterprises. Generally speaking, its listing standards are different from those of the main board market. The establishment of the GEM market is a common practice in economically developed countries and regions in the world. It aims to support the listing and financing of small and medium-sized enterprises that do not meet the main board listing requirements but have high growth potential, especially high-tech enterprises. Therefore, its establishment will greatly promote the development of small and medium-sized entrepreneurial enterprises with development potential.

*About financing:

One of the purposes of establishing the stock market is to raise funds for listed companies. In fact, in 2000, when the stock market was operating normally, it achieved the highest annual financing of 210.931 billion yuan.

In a narrow sense, financing is the behavior and process of raising funds for an enterprise. That is to say, the company adopts certain methods and channels to raise funds from the company's investors and creditors through scientific predictions and decisions based on its own production and operation status, capital ownership status, and the needs of the company's future business development. Organize the supply of funds to ensure the company's normal production needs and financial management activities required for operation and management activities. The company's motivation for raising funds should follow certain principles and proceed through certain channels and methods. We usually say that companies raise funds for three main purposes: the company wants to expand, the company wants to pay off debts, and the mixed motivation (the motivation of expansion and debt repayment are mixed together). Broadly speaking, financing is also called finance, which is the financing of monetary funds. The parties involved raise or lend funds in the financial market through various methods.

Financing can be divided into direct financing and indirect financing. Direct financing is a financing activity carried out directly by governments, enterprises, institutions, and individuals as borrowers of last resort to lenders of last resort without the intermediary of financial institutions. The funds financed are directly used for production, investment, and consumption. Indirect financing is a financing activity carried out by the borrower of last resort to the lender of last resort through the intermediary of financial institutions, such as enterprises financing from banks, trust companies, etc.

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*The GEM, which has been brewing for many years, is expected to land in Shenzhen next year (2008). Wang Shouren, secretary-general of the Shenzhen Venture Capital Association, said that the plan to set up a GEM in Shenzhen has been submitted to the State Council for approval, and it is expected that Shenzhen will officially open a GEM next year.

After the plan is approved, the specific conditions, trading rules, information disclosure and other rules for companies to be listed on the GEM will be formulated and released one after another. However, the specific time for the launch of GEM has not yet been determined. At present, there are more than 1,000 companies preparing to list on the GEM.

Currently, the construction of multi-level capital markets is accelerating. Relevant experts said that the main board is currently and will be in Shanghai in the future, while Shenzhen is dominated by small and medium-sized boards and GEM. Moreover, the China Securities Regulatory Commission will formulate OTC rules for unified supervision.

B. China GEM

1. Main characteristics of GEM

China’s GEM market is being prepared. So far, many companies have proposed and will More companies are preparing to apply for listing, and it is expected that the first batch of listed companies will be more than 50. From the information disclosed through different channels and the comprehensive analysis of the characteristics of foreign GEM markets, it can be predicted that China's GEM market will be similar or similar to the main characteristics of the GEM markets in other countries and regions.

1. The threshold is relatively low

The GEM listing threshold is relatively low, which is a common feature of all established entrepreneurial markets. However, how "low" is the upcoming GEM? Although the GEM listing plan has not been finalized, many experts predict that it will include some core contents: tangible assets of more than 8 million yuan and registered capital of more than 10 million yuan can be listed; the number of issuing shareholders must be at least 300, and each person must have at least 1,000 There is no need for thousands of people and thousands of shares on the main board market. Listed companies do not pursue profit indicators, but only need to have at least two years of operating records, which fully reflect two years of high growth. The main business must account for more than 70% of sales revenue, and the sales revenue and profits of the main business must increase incrementally. The amount must exceed 30%.

2. Improve information disclosure

China’s GEM market is expected to greatly increase the density of information disclosure. Regular reporting is provided quarterly. At the same time, non-financial information of senior managers must be disclosed regularly. The so-called non-financial information includes achievements, patents, award status, illegal and disciplinary behaviors of senior managers, etc. In addition, the disposal of shareholdings of senior managers must also be reported in a timely manner. In order to reduce the cost of information disclosure, all disclosures will be made online, and investors can also learn about the situation of listed companies at any time.

3. Implement full circulation

The shares of companies listed on the GEM will be fully circulated, providing a channel for the full exit of venture capital. The circulation time of the promoter's shares can be circulated one year after the public issuance, and the shares of senior managers of the listed company can be circulated one year after the listing.

4. Wide range of rise and fall

In order to ensure active trading, the GEM market is expected to relax the rise and fall range of stock prices to 30%. Regarding the anti-risk ability of the GEM market, the GEM has raised the market entry standards, with the average market entry level raised to 300,000 yuan, and each transaction must be at least 50,000 yuan, which helps retail investors better avoid risks.

In addition, most of the GEM market adopts high-efficiency computer trading systems, which do not require trading venues, have low transaction costs and high efficiency. At the same time, the GEM market will also establish a strict sponsor plan and strict company management. .

Second, the opportunities that the establishment of the GEM market will bring to the Chinese market

China's main board market is playing an important role in raising construction funds, transforming corporate mechanisms, optimizing resource allocation, increasing national tax revenue, and improving economic benefits. In other aspects, it has played a major role and achieved very remarkable results. In November 1999, Hong Kong's GEM market was officially launched, which has had a great impact on China. The establishment of the GEM market will be another opportunity for the Chinese market:

1. Promote high-tech enterprises, small and medium-sized enterprises and high-growth enterprises Development of sexual enterprises

Effective and standardized exit mechanism. The establishment of the GEM market can provide a standardized exit mechanism for venture capital funds and promote the development of venture capital funds.

2. Provide new investment channels

China currently has few investment channels and fewer varieties. The establishment of the GEM market provides new investment channels for investors, allowing them to share the results of high-tech development. Judging from foreign data, the rate of return on the GEM market is much higher than the rate of return on the main board market and higher than the rate of return on savings deposits.

3. It is the need of international competition in the capital market.

At present, in addition to developed countries such as the United States, many developing countries and regions in Asia have also developed GEM markets. The establishment of the GEM market in our country is in line with the needs of international competition in the capital market.

4. Contribute to the reform and improvement of the main board market

The establishment of the GEM market will help promote the reform and improvement of China's main board market. Due to the lack of experience in China's main board market, there are many irregularities and unreasonable things, which need to be gradually improved.

Three Risks Faced by China’s Establishment of GEM

The birth of China’s GEM is not far away. Although there are still various controversies over the model and timing of establishing the GEM, the GEM is another rare opportunity for capital accumulation in China's financial market, and it is also an attempt with unprecedented risks. The main risks currently faced by China's GEM:

1. The stock price is easy to manipulate

Since the GEM market has a lower threshold than the main board market, the equity scale of companies listed on the GEM market is generally small. , the circulating shares are even smaller, so the stock price is easily manipulated. In particular, institutional investors mainly enter the GEM market, speculating on small-cap stocks, and it is difficult to turn around. Once a stock is heavily held, it must be speculated to a very high price, otherwise it will be difficult to ship. The stock market is the "story." In the Chinese stock market, the smaller the market, the more stories there are, and it is common for market makers to manipulate individual stocks. Since there are no state shares or legal person shares on the GEM, after a period of listing, it becomes a fully tradable market. In this way, it will become more common for bookmakers to fully control the market and manipulate stock prices. On the other hand, the GEM market has a large subject matter and is easily hyped. In the early stage of the GEM market, there are a small number of listed companies and abundant market capital supply, so excessive speculation may occur in the GEM market. The GEM market itself has no concept of price-to-earnings ratio. The price-to-earnings ratio of most stocks will be hundreds of times higher. The stock price is controlled by the will of the banker. It all depends on funds. Investors will face the risk of losing their money at any time.

2. State-owned institutions may boldly speculate

Many of the institutional investors entering the GEM market are state-owned institutions, which is prone to problems similar to those in China’s treasury bond futures market in the past, namely State-owned institutions use state funds to speculate boldly without fear of losing money. If this phenomenon occurs in the GEM market, it will not only further cause excessive speculation in the GEM market, but also lead to serious trading chaos.

3 Impact on the main board market

If the GEM market implements full circulation of shares, and the state shares and legal person shares of companies currently listed on the main board cannot be circulated, then except for large companies that are willing to list on the main board, Small and medium-sized companies may be more active in seeking the GEM market. With the current majority of small and medium-sized companies in my country, the supply of companies listed on the main board will inevitably be affected. The establishment of the GEM market will inevitably have an impact on the main board market in the short term. Investors may withdraw funds from the stock market and ship goods in exchange for chips. Economists believe that investors’ investment decisions are based on the benefits of enterprises. But everyone who trades in stocks knows that investors usually follow the banker. Stock selection by bankers is random. Often, the smaller the market, the faster it jumps, and the easier it is to make money. This is why bankers are particularly interested in the GEM market. Therefore, within a certain period of the establishment of the GEM market, It will inevitably impact the main board market, and it will certainly affect the stability of the main board market, stock market value, stock trading volume, etc.

3. The stock price is difficult to determine

Companies preparing to be listed on the GEM may be "poor-performing stocks" or even loss-making stocks from the beginning. Is the so-called "high technology" really "high"? Is there anything "creative" in the so-called GEM? It is difficult for market participants to make an accurate judgment on it.

Companies listed on the GEM do not focus on their “origins” but their future. Their value cannot be judged simply by net assets and price-to-earnings ratios. The value factors of intellectual property, goodwill, intangible assets, and technology shares must also be considered. But these factors are difficult to price. This brings about two risks: First, if the issue price is higher, the primary market will no longer be as profitable as subscribing for new shares on the main board market, and it is possible to be trapped immediately after the listing. Second, the pricing of a listed company on its first day of listing may be the highest price in the next few years, and investors may buy it immediately.

4. Joint control

Since the management of listed companies and the inventors of new technologies hold a large proportion of shares, they have great decision-making power over the enterprise, and it is easy to cause arbitrary decisions due to Major mistakes in investment decisions cannot be ruled out by the fact that some individuals with low moral standards and evil intentions will join forces with market makers to manipulate the stock price before the expiration of the ban on sales of their shares, conduct malicious speculation in the company's stocks, and then dump them. Subsequently, due to The project failed and was delisted.

5. Investors are more likely to be deceived

Different from the performance packaging and equity packaging before listing on the main board market, the GEM will mainly focus on the content and future development of technological products. For packaging, describe the future as the present, the small as big, and individual projects as the main business. On the one hand, it is difficult for laymen to distinguish between true and false, and on the other hand, private enterprises do not have the supervision of state shareholders and superior authorities, which leads to the deception of investors, resulting in low quality and high prices as soon as they are listed, posing huge risks. At the same time, in the main board market, small-cap stocks have the advantage of capital expansion. As long as they invest in the long term, they will only win but not lose. However, if this company is moved to the GEM, it may have different effects. Big assets wantonly drive up the share prices of small-cap stocks, but these stocks may have no investment value, suffer losses for many years, and eventually have to be delisted, causing investors to suffer heavy losses.

6. Ups and downs will become commonplace

If China’s GEM does not improve the prevention mechanism, small-cap stocks will either be speculated to the sky or be thrown heavily to the ground, and they will be in a long-term downturn, and large-cap stocks will be in the doldrums. Funds are trapped, just like the B-share market that was not open to the country before, and it is difficult to have the opportunity to exit. Once there is a problem with the fundamentals of a listed company, it may plummet continuously, with big ups and downs, which will not only drag down the GEM stocks, but also cause the main board market to plummet. The GEM's price limit may reach 30%, and ups and downs will be commonplace. If it really happens like Nasdaq in the United States, where 50% of the stocks fall below the listing price after listing, 70% of the stocks fall close to the issue price in the second year of listing, and about 80% of the stocks are delisted due to losses and bankruptcy in the third year of listing. , can Chinese investors psychologically bear it? It is difficult to imagine the disastrous consequences for individuals and society.

7. Violations are more difficult to deal with

From the perspective of the main board market, due to China’s backward regulatory methods and the concealment of market makers’ illegal methods, there were still individual violations in the secondary market in 1996 and 1997. were investigated, but not one in 1999 and 2000, not to mention the addition of a GEM market. Since there is no price-earnings ratio standard, illegal speculation cannot be established. Because the 30% price limit cannot be established, abnormal stock price fluctuations cannot be established, and it is difficult to refer to the original regulations. , making it more difficult to detect and punish violations. Upon inspection, it is likely that the entire small-cap stock market has hit its daily limit. At the same time, it is difficult to distinguish between intentional and unintentional violations of listed companies, such as failure to achieve profit targets, investment failure and delisting. If you wait until there are a lot of problems before vigorously rectifying them, the cost will be heavy.

Four measures that must be taken to establish the entrepreneurial market

Risk does not negate the significance of the launch of the GEM market. The establishment of the GEM market in mainland China is very necessary, but the current preparations are not very Sufficient, the conditions are not very mature, and there is a lack of ready experience in the supervision of GEM. Therefore, after launching the GEM, you may face the above and other series of risks, or even more serious problems. However, we cannot deny the GEM market because of this. We must continue to solve problems and improve them in the process of development. The GEM market was established under the conditions when China's market economic system was initially established, China joined the World Trade Organization (WTO), and China's capital market needed to be standardized in accordance with marketization and internationalization. Therefore, we must emphasize breakthroughs, innovations, and progress in market operations and various policies and measures:

1. We must break through the actual ownership discrimination. The main board market mainly serves the reform of state-owned enterprises. of. Although the policy does not restrict non-state-owned enterprises from being sponsoring shareholders and controlling shareholders, in fact it is very difficult for non-state-owned enterprises to initiate listings. The GEM market should no longer be divided into state shares, legal person shares, and public shares, and there should no longer be restrictions on the flow of stocks held by some shareholders. Adhere to the principle of equal shares, equal rights and equal benefits. The stocks of sponsor shareholders and senior managers cannot be frozen indefinitely, but a gradual circulation method should be formulated.

2. Government intervention must be reduced

If local government intervention is too large, it will bring great risks to the future operation of the GEM, and its risks may even be greater than the current A-share market. For example: listed companies should be selected by the market, and administrative agencies should not issue indicators from top to bottom, and then recommend companies from the bottom up, changing administrative selection to market selection.

3. It is necessary to break through the restrictions on allotment and capital increase and share expansion

Allotment and capital increase and share expansion on the main board market are basically subject to the approval of the securities regulatory authorities, but allotment and capital increase and share expansion are corporate The government does not need to interfere in the relationship with shareholders.

4. Full circulation of shares should be implemented

GEM companies should implement full circulation of shares. If the shares of senior managers are not allowed to be circulated during their term of office, it will not only lead to the current imbalance in the equity structure of the A-share market. It is a reasonable question, and the resignation of senior managers of GEM companies in order to sell their equity will have a major adverse impact on the development prospects of the companies and bring risks to the operation of the GEM.

5. Establish and improve the sponsor system

Due to the lower listing standards of the GEM market, it is necessary to establish a more complete sponsor system, which includes two aspects: First, The requirements for the sponsor’s qualifications and the second are the sponsor’s responsibilities. For example, in Hong Kong, the sponsor on the main board market will no longer bear responsibility after the issuance and listing work is completed; on the second board market, the sponsor's liability period is two years.

6. Adhere to the path of professional operation and professional development

GEM companies should attach great importance to the selection of investment projects and reduce related transactions, and adhere to the path of professional operation and professional development. development path. Since most GEM companies are growth-oriented small and medium-sized enterprises, after financing, they should avoid the loss of investment funds and deterioration of operating conditions caused by random investment, reduce the many behaviors in related transactions that may be detrimental to the development and efficiency improvement of listed companies, and ensure that company quality and reduce GEM operation risks.

7. Market rules need to be established and improved

The GEM has been repeatedly postponed. The main reason is that there are still many areas to be improved in the preliminary GEM market rules, and there are still problems and The main board market has the same problems, such as the approval system, the quality of listed companies, the behavior and supervision of listed companies, the prevention of unfair transactions, the elimination of unqualified companies, etc. These problems cannot be solved well. It may bring great risks to the GEM market, and a complete set of market rules must be established.

Due to the characteristics of the GEM itself, it is destined to experience insider trading, market manipulation, fraud, fraud and other irregularities. In order to protect the interests of investors, supervision must be stricter than that of the main board market. For example, the slogan of the Nasdaq market in the United States: protect investors and ensure market regulation. To this end, a system of laws and regulations that will govern the GEM market must be established to ensure the openness, fairness, and impartiality of the market. All brokers must behave in accordance with market regulations and ethical standards. More severe punishment measures will be implemented for disciplinary violations.

8. Actively learn from the experience of the United States, Europe and other countries and regions

China’s GEM market faces good development opportunities in the future, but there is still a long way to go to achieve success. To go forward, we must actively learn from the experiences of the United States, Europe, Japan, Hong Kong and other places. Mr. John Wall, President of Nasdaq International, once gave a special speech entitled "Nasdaq and China's GEM Market" to the Shenzhen securities industry at the Shenzhen Stock Exchange. In his speech, Mr. John Wall introduced the experience and achievements of Nasdaq, and expressed his views on the development of China's GEM market, emphasizing that a successful capital market cannot simply look at the size of its trading volume, index The most important thing about the rise and fall of the stock price is its contribution to the national economic development. These opinions and suggestions are beneficial to the China GEM market. China GEM can cooperate with Nasdaq and EASDA in information exchange, personnel training, experience exchange, network technology, etc.

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< p>C. The main goal of the Hong Kong Startup Edition (GEM) is to raise funds for a large number of companies with growth potential operating in Hong Kong and the Mainland, as well as some large and medium-sized state-owned technology companies and small and medium-sized private technology companies in the Mainland that have development prospects. Provide a crowdfunding market.

The conditions for domestic enterprises to apply for listing on the Hong Kong Startup Edition are as follows:

1. A joint-stock company approved by the provincial people's government or the State Economic and Trade Commission, established in accordance with the law and operated in a standardized manner;< /p>

2. The company and its main sponsors comply with relevant national regulations and policies, and have no major violations of laws and regulations in the past two years;

3. Meet the conditions stipulated in the Hong Kong Venture Edition Listing Rules;

4. The listing sponsor believes that the company has the feasibility of issuance and listing and assumes sponsorship responsibilities in accordance with regulations;

5. High-tech enterprises certified by the Ministry of Science and Technology are given priority for approval.