Money Matters | Hong Kong’s new start-up board is a dream come true, for all the wrong reasons

To the creative minds in mainland China, the recent proposal of a new board for start-up companies by the Hong Kong Stock Exchange is a dream come true.

Unfortunately, all that glitters is not gold, and investors have seen plenty of the exchange’s creativity, which doesn’t quite extend to finding a cure for cancer or building cars than run on ethanol.

Imagine you are one of those eager beavers keen to make a quick fortune by listing a too-good-to-be-true business in Hong Kong.

You will need some sort of operating business, a dozen friends to dress up as suppliers and customers, a friendly banker to verify your cash flow, an auditor to sign off on your exaggerated profit, a sponsor to package these together, and the money to pay off all of the above.

If the HKEX succeeds in introducing the low regulatory burden market, the New Board Pro, you won’t need any of the above. This is because you won’t need a profit track record, a financial statement, a sponsor or a prospectus, according to consultation paper released last week.

You need only two things. Firstly, a market capitalisation of HK$200 million (US$25.6 million). As long as you can promise a 20 per cent post-IPO increase in your stock price, there are “specialists” to help. That will cost a little, but it’s worth it.