On August 28th, a news stirred up new ripples in the Hong Kong capital market.

According to sources cited by the South China Morning Post, the Hong Kong Stock Exchange is studying the merger of its GEM (Growth Enterprise Market) with the main board, and plans to add a new Chapter 18D to the main board's Listing Rules, providing a direct listing channel for small and medium-sized enterprises and startups that have not yet met traditional profit standards.

In response, a spokesperson for the Hong Kong Stock Exchange stated that the first phase of measures to enhance the competitiveness of the listing mechanism has been implemented and has received widespread market support. In the future, they will continue to study optimization plans and announce progress in a timely manner.

Although it is still in the research stage and the specific rules are not clear, the market's discussion on the next stage of Hong Kong's listing system has already heated up.

In the past 8 years, Hong Kong has established a groundbreaking global listing system for unprofitable biotechnology through 18A, allowing innovative pharmaceutical companies that are still in the clinical stage and have not yet made profits to enter the public market in advance. 18C has also expanded its boundaries to specialized technology fields such as AI, advanced manufacturing, and semiconductors.

The 18D that is currently brewing has become a natural extension of this logical line, targeting a wider range of growth oriented enterprises, including those that already have mature technology platforms, preliminary business model validation, but are still small in scale.

For the Chinese biotechnology industry, the significance of 18D may lie in enabling more companies at different stages of development to find suitable listing channels in Hong Kong - allowing capital to truly grow together with innovation.

01. GEM's dilemma and 18D's breakthrough

To understand the logic of the 18D reform, it is first necessary to have a clear understanding of the current situation of GEM.
In 1999, the Hong Kong Stock Exchange established the Growth Enterprise Market (GEM) with the original intention of providing financing channels for small and medium-sized enterprises that did not meet the standards of the main board, which became a popular choice for technology stock listings. However, more than 20 years have passed, and the current situation of GEM has gradually deviated from its original intention - there are few new stocks, low trading volume, and high-quality enterprises continue to be lost.

According to monthly statistics from the Hong Kong Stock Exchange, as of the end of July 2026, GEM had a total of 306 listed companies, a decrease from the 314 companies in the same period last year. In the first seven months of 2026, GEM had only 2 newly listed companies, while 8 companies were delisted during the same period.

The shrinkage of liquidity is even more glaring. In July 2026, the daily average transaction volume of GEM was only HKD 1.626 billion, a year-on-year decrease of 61.72%, and the total market value was only HKD 78 billion. During the same period, there were over 2400 listed companies on the main board, with a turnover of HKD 218.5 billion and a total market value of approximately HKD 47 trillion.
There is a huge volume gap between the two sectors, which also condenses GEM's long-standing dilemma - a large number of high-quality targets would rather wait for a long time than be listed on GEM.

So, merging the ChiNext and Main Board became a breakthrough option.

The South China Morning Post, citing informed sources, reported that the proposal to establish Chapter 18D by the Hong Kong Stock Exchange will become a core part of the second phase of the listing system review, allowing newly established small companies that cannot meet profit requirements to go public.

According to informed sources, about 300 companies currently listed on the ChiNext board may be exempted under the new articles of association and directly transferred to the main board for listing.

The new chapter replacing the ChiNext board will expand the scope of companies listed on the Hong Kong Stock Exchange and also help smaller companies obtain financing. This reform will help enhance overall market diversification and benefit the real economy, "said the person mentioned above.

Instead of letting about 300 GEM companies continue to consume regulatory resources in corners, it is better to merge them into the main board and accept stricter ongoing responsibilities and more comprehensive market inspections.

In other words, the action taken by the Hong Kong Stock Exchange this time is not essentially to "rescue the ChiNext board", but to acknowledge that the ChiNext board has failed and then incorporate it into the main board system in a more pragmatic way.

02. From 18A to 18D: Multi level Capital Ladder

At present, the main board of the Hong Kong Stock Exchange has three special chapters: Chapter 18A accepts unprofitable biotechnology companies, Chapter 18A targets SPAC listings, and Chapter 18C targets large unprofitable specialized technology companies.

Among them, the launch of 18A in 2018 is the most iconic institutional reform in the Hong Kong capital market in recent years, and it is also a breakthrough in concept.

It acknowledges that the value of biopharmaceutical companies is not necessarily linked to current profits. The research and development stage of core products, regulatory progress, intellectual property rights, and professional investor recognition can also be used as evaluation dimensions, fundamentally changing the capitalization path of Chinese innovative pharmaceutical companies. Hong Kong has become the world's second largest biotechnology listing center through this.

As of June 2026, a total of 94 companies have been listed on the 18A market; In the first half of 2026, unprofitable biotechnology companies raised a total of HKD 12.691 billion through IPOs, with a total of 11 companies entering the Hong Kong market. The Hong Kong stock market's 18A index has seen a cumulative increase of 60% over the past two years, indicating a significant valuation recovery for the sector.

The 18C, which will be launched in 2023, will extend institutional dividends to hard technology fields such as AI, advanced manufacturing, and semiconductors. As of the end of May 2026, a total of 18 companies have been listed under Chapter 18C rules, raising a total of HKD 35.1 billion. A group of companies representing the forefront of Chinese technology have entered the public investment field through this, and biotechnology fields such as Jingtai Technology and Zhitai Technology have also completed their listing through Chapter 18C.

So, what role will the upcoming 18D play? According to the current disclosed direction, 18D may target the long-standing interlayer zone between 18A, 18C and traditional motherboards.

If 18A serves biotech companies with products but no profits, and 18C serves hard tech companies with technology but no revenue, then 18D targets a wider range of growth stage enterprises, including companies with preliminary business model validation but still small in scale.

A multi-level capital ladder is gradually forming between the three, from laboratory to commercialization, from early stages to growth, allowing innovative companies at different stages of development to find suitable listing channels in Hong Kong.

03. New variables in the biotechnology industry

For biotechnology companies, the greatest significance of 18D is not only the addition of an IPO path, but also the extension of the entire financing lifecycle.

After an innovative pharmaceutical company goes public, it often still needs billions of yuan to complete Phase III clinical trials, overseas registration, and commercial promotion - "IPO completion" is just the starting point, what the company really needs is a sustainable refinancing market.

18A proves this point: by the end of 2025, companies eligible for special listing chapters have accounted for 29.7% of the total trading volume of Hong Kong stocks. These companies have continuously obtained development funds through rights issues, share issuances, and other means, and a complete capital cycle has been established.

In July 2026, the Hong Kong Stock Exchange will further allow the commercialization of biotech to continue to maintain the 18A pathway, to avoid companies losing their suitable institutional arrangements as they become more successful, which is particularly crucial for many biopharmaceutical companies that are entering the commercialization stage.

But the reality that 18A enterprises are facing is precisely the proposition that 18D must face. As of August 2026, only about a quarter of the 94 18A listed companies have achieved breakeven, with most companies still in a loss making state, and a considerable proportion of the market value of 18A companies has fallen below the HKD 1.5 billion threshold at the time of listing.

When the secondary market cannot provide sufficient liquidity support, the refinancing ability of these companies will be fundamentally constrained. Some investors admitted that the biopharmaceutical industry is in a stage of capital winter, and the sustained negative wealth effect in the secondary market will be transmitted to the primary market, making it increasingly difficult for innovative pharmaceutical companies to raise funds.

If 18D only puts more early-stage companies on the main board but cannot solve their liquidity problems after going public, GEM's lessons will be repeated on the main board.

More noteworthy is that the Hong Kong stock market's 18A market in 2026 is undergoing a brutal valuation restructuring. The market is no longer paying for simple "pipeline stories", and investors are beginning to question whether clinical data has global competitiveness, whether targets have differentiation, and whether overseas rights can be realized.

This logical switch from "quantity" to "quality" means that even with the 18D channel, the companies that can truly establish themselves in the market are still those with global competitiveness. Whether 18D can become an effective capital channel depends on whether the Hong Kong market can provide sustained pricing power and liquidity support for these early companies - and this is precisely the most difficult question to answer in institutional design.

The Hong Kong Stock Exchange's gamble is that the market's discernment is mature enough. For biotechnology companies in the middle ground, 18D provides an early window into the open market; But after the window opens, whether it can stay or raise the next round of money ultimately depends on the company's own technological strength and business logic.

reference material:

1.Hong Kong Exchanges and Clearing exploresmerging GEM with main board, source says
2. In the investment industry, going to Hong Kong for IPO is going to change
3. R&D customer, reaching 18D! Hong Kong Stock Exchange restructures IPO rules! How will China's biotech go public in Hong Kong be rewritten?