Friday, March 11, 2005
NYSE, Nasdaq eye China
Andrei Postelnicu / New York/Beijing/London March 11, 2005\
The New York Stock Exchange (NYSE)and Nasdaq have both applied to open offices in China amid heightened competition for Chinese listings between the two and their rivals in London and Asia.
The London Stock Exchange in particular has become more aggressive in courting Chinese companies for initial public offerings since the passage in the US of the Sarbanes-Oxley legislation, which set tough corporate governance rules.
Chinese regulators refused to comment on the applications by the NYSE and Nasdaq to open representative offices, but officials in Beijing informed foreign bankers about the move in a meeting last week.
Chinese companies provided the bulk of the Nasdaq’s international listings last year.
However, that may change with the $5 billion-$10 billion IPO later this year of China Construction Bank, one of the country’s big four state banks.
CCB is considering shunning New York because of the high cost of meeting the Sarbanes-Oxley requirements, which could set a precedent for a number of similarly large Chinese bank listings.
The LSE has made its own bid to attract Chinese companies to both its main list and to its Alternative Investment Market for smaller businesses. Air China decided to list stock in London in December - a snub to the NYSE.
In October, the LSE opened a representative office in Hong Kong, with five staff to service companies.
Explaining the move, it said: “We recognise that China is a fast-growing economy that will need capital as it grows. We think we offer experience, a breadth of analytical coverage, a depth of liquidity and high standards in our approach to corporate governance that will be attractive to Asian companies.”
There are 17 mainland Chinese companies listed on the NYSE with nine from Hong Kong and five from Taiwan. London has six Chinese companies on the main board and five on AIM with about 10 more in the pipeline.
The complaints of the Chinese about Sarbanes-Oxley mirror those of many non-US companies that want to go to Wall St.
A Beijing office would be the NYSE’s third in Asia - after Tokyo and Hong Kong. Nasdaq previously had an office in Shanghai but closed it about two years ago.
Additional reporting with Richard McGregor & Norma Cohen