BEIJING/HONG KONG (Reuters) - Nasdaq, the No. 2 U.S. stock exchange, set up shop in Beijing on Monday as it looks to attract more Chinese firms to list on the exchange instead of alternatives such as Hong Kong.
By Jason Subler and Rita Chang
BEIJING/HONG KONG (Reuters) - Nasdaq, the No. 2 U.S. stock exchange, set up shop in Beijing on Monday as it looks to attract more Chinese firms to list on the exchange instead of alternatives such as Hong Kong.
Stock exchanges around the world are trying to lure Chinese firms to list with them as investors seek to capitalize on the rapid growth of the world's fourth-largest economy.
The Nasdaq Stock Market Inc <NDAQ.O> trades the shares of 52 Chinese companies with a combined market value of $57 billion.
!ADVERTISEMENT!Nineteen have joined Nasdaq so far this year, compared with nine in 2006, and there will be at least one more listing this year, Guang Xu, Nasdaq's chief representative for China, told a news conference.
"We've got a very strong pipeline," Xu said of the prospects for Chinese listings in 2008, but he declined to put a figure on it. Energy-related companies could be especially active, he said.
Xu, who will head the Beijing office, said Nasdaq itself would consider listing its shares in Shanghai if China changes its regulations to permit listings of foreign companies.
Nasdaq reached deals this year to take over the Philadelphia and Boston exchanges and to buy Nordic market operator OMX jointly with Borse Dubai.
Stepping up its Asia-Pacific presence would complete Nasdaq's global reach, Eric Landheer, the company's head of Asia-Pacific, told Reuters in Hong Kong.
"The major piece that's still not there is Asia," Landheer said, adding: "China is our most important market right now."
TOUGH COMPETITION
While Chinese listings on Nasdaq have accelerated, the bourse still lags far behind Hong Kong as the preferred place for mainland firms to raise funds overseas.
Forty-nine have listed in Hong Kong this year, raising US$28.6 billion, according to Dealogic. They include e-commerce firm Alibaba.com, which snubbed the U.S. market for a US$1.5 billion Hong Kong flotation.
Stricter U.S. corporate governance rules mandated by the Sarbanes-Oxley Act passed in the wake of the Enron and Worldcom scandals have been cited as a reason why some Chinese firms have chosen not to list in the United States.
But Nasdaq Vice-Chairman Michael Oxley, who co-authored the legislation when he was a congressman, said the regulations have not proved to be a showstopper.
"Some of the Chinese companies that have listed have exceeded the requirements of both our listing standards and Sarbanes-Oxley," he told Reuters.
Nasdaq also faces competition within China, as Beijing redoubles its efforts to build its own Nasdaq-style board.
China agreed late last year to let the New York Stock Exchange and Nasdaq open offices in Beijing as part of deals struck during the first round of a high-level "strategic economic dialogue" with the United States.
NYSE Euronext <NYX.N>, parent of the New York Stock Exchange, said on Monday it would open its Beijing office on December 11, the eve of the next round of the strategic dialogue.
Treasury Secretary Henry Paulson will lead the U.S. delegation to the talks, which will take place near Beijing.
Washington is likely to press Beijing to raise the caps that now limit foreign investors to minority stakes in local banks and financial firms. China has already promised to lift a moratorium by the end of the year on new foreign brokerage joint ventures.
(Reporting by Jason Subler and Rita Chang; Editing by Alan Wheatley & Ian Geoghegan)
