China is Nasdaq's fastest source of growth in new listings, executive says

SHANGHAI, China (AP) - Chinese companies are the biggest source of new share listings for Nasdaq Stock Market Inc. (NASDAQ:NDAQ) and don't appear to be discouraged by stricter regulatory requirements, the U.S. exchange's international president said Wednesday. Mainland Chinese companies now account for 29 of about 3,300 companies listed on Nasdaq, said the president of Nasdaq International, Charlotte Crosswell, in an interview in Shanghai.

The exchange also lists about 50 firms from Hong Kong, putting China third behind first-place Israel and second-place Canada in having the most non-U.S. listings on the Nasdaq, Crosswell said.

Crosswell declined to give any figures on upcoming new listings or other specific business plans in China, but she said growth was accelerating.

"Obviously the growth is coming from China, and that's where we're really seeing the pipeline expand, in terms of numbers of companies coming to market," said Crosswell, who was in China's commercial hub to encourage a parade of new Chinese firms marching toward an initial public offerings, or IPO, of stock.

The growth comes despite the perceived disadvantage of a U.S. listing under new federal rules requiring stricter audits and increased disclosure.

Nasdaq President and CEO Robert Greifeld earlier this month said efforts to attract international listings have been hampered by the Sarbanes-Oxley Act, which took effect in 2002 in response to a spate of U.S. corporate scandals.

However, Crosswell said Chinese companies tell her the regulatory hassles are offset by added trust from investors for U.S.-listed shares. Chinese firms also have comparatively little difficulty implementing the requirements because they are often too young to have developed rigid corporate structures, she said.

"They believe it's a good thing to have," Crosswell said. "They're actually very happy they can prove they can comply with it because they think that's a good story for investors."

As part of its expanded presence in China, Crosswell said Nasdaq was now advising firms that were still two to three years away from listing. It formerly worked mainly with companies that were much closer - usually six months to a year - from listing on the exchange.

While Nasdaq listings from China have traditionally come from the high-tech sector, they are now hailing from increasingly diverse industries, including services, manufacturing, health care and media, she said.

Business has also been boosted by agreements with the governments of Zhejiang and Jiangsu, two of China's most economically dynamic provinces, to steer local companies toward Nasdaq listings.

"It's really starting to pickup," she said. "It's certainly our fastest growing market."

Crosswell said the Nasdaq doesn't seek to compete with local stock markets and prefers to encourage firms to launch dual listings at home and in the United States.

Internationally, the exchange continues to view NYSE Group Inc.'s New York Stock Exchange as its chief rival, she said.

Along with competing to draw foreign listings, the Nasdaq and NYSE have become rivals in expanding overseas in a first wave of consolidation in global stock markets.

Nasdaq amassed a 25 per cent ownership stake in the London Stock Exchange PLC, Europe's biggest market, after the LSE rejected Nasdaq's initial US$4.2 billion takeover offer in March. The NYSE (NYSE:NYX), meanwhile, is moving to merge with Euronext NV.r

© The Canadian Press, 2006