GEM stocks hampered by limited distribution

GEM stocks suffer as companies and brokers place shares in a the hands of a small number of investors.

Hong Kong's Growth Enterprise Market, the six-month-old board created to help unprofitable companies raise public money, is taking the biggest beating of its short life. It fell 38% in the last month and analysts predict it could fall further as poor distribution of many companies' shares exacerbates the broader flight from technology stocks.

Shares of more than half the 23 companies listed on GEM have plunged below their issue price. While analysts attribute part of the decline to the world-wide bursting of the internet bubble, critics are increasingly pointing the finger at GEM regulators and at the investment banks which underwrite the listings.

The tendency of newly listing companies to place all or...

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