Technology stocks have come under immense pressure in the past year, not just in Asia but worldwide. However, the GEM seems to have been hit harder than most similar boards in Asia. This is because the GEM is dominated by Internet start-ups and is short of semiconductor makers that have helped to stem the losses on boards such as Singapore's Sesdaq. There are 49 companies listed on the GEM and the majority of them are based on the same model - business-to-consumer Internet portals that rely on advertising revenue. Amongst these are tom.com, hkcyber.com, and 36.com. But this business model has fallen seriously out of favour and these companies are flailing big-time.

A disturbing 36 of the GEM's listed companies are now trading below their initial public offering (IPO) price, including all seven of the companies listed at the very start of the board's existence. Only 27 companies were able to report profits as of October.

Part of the problem is that investors, scared by the plunge in value of technology stocks, are starting to once again embace companies with proven business models, such as semiconductor makers. One unnamed analyst at a Hong Kong brokerage said that most GEM-listed companies were unlikely to break even in the next two to three years, adding: 'There is a global trend to pay closer attention to revenue generation. Investors want to see real increases in earnings and real money.'

Nonetheless, as a fund-raising venue, GEM is deemed a success. As of September 2000, the GEM bourse had raised about US$1.83bn, compared with South Korea's Kosdaq which raised about US$2.03bn over the same period. Japan's second board raised US$861m. Moreover, most of the companies are of the opinion that the GEM will stablise in time, in spite of initial growing pains due to weak market sentiment and regulatory inconsistencies.