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Penny Wise, Pound Foolish: Hong Kong¡¦s Penny Stock Incident                                                                                                                                                                                                          
Product Ref: 05/259C Company: N/A

Product Type: Case Industry: Banks & Diversified Financials
Public Sector & Non-Profit

Related Product(s): Teaching Note
Authors: Ka-Fu Wong   Jennifer Lee
In 2002, the HKEx released a consultation paper with proposals for continued listing eligibility for ¡§penny¡¨ stocks. A panic sell-off ensued as investors believed that they were about to lose both the marketplace for their shares and also the protection of the listing rules. In one trading day, roughly 10% of the market capitalisation for microcaps was wiped out. What went wrong? Was this related to the Exchange¡¦s status as a for-profit entity following its demutualisation? To shed investor scepticism about the quality of listed companies and to ensure its competitiveness with other financial centres, Hong Kong sorely needs better rules to promote market transparency and better corporate governance.
Functional Area : Economics & Business Policy

Issues: Hong Kong Stock Exchange, Penny stock incident, demutualisation
Length: Text: 9 pages
Exhibits: 6 pages
Country: Hong Kong SAR

Pub. Year: 2005 Level of Difficulty: 1
This product type is available in the following language(s):      English   Simplified Chinese
Related Information: N/A
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