NASDAQ enhancing China biz
By Zhu Boru (China Business Weekly)
Updated: 2004-09-20 10:40

Officials of the US-based NASDAQ are organizing a new team for its business in China, where it expects more local companies, from a broad range of sectors, to list in the bourse.

"Our new (management) strategy here is team-based," said Stuart Patterson, general supervisor of NASDAQ's Asia-Pacific operations.

Patterson, who joined the NASDAQ in June, is responsible for finding a new chief representative for its China office, which is located in Shanghai.

Apart from Peter Yandle, NASDAQ's senior managing director of international marketing, Ghanshyam Dass, the company's managing director for Asia, and Patterson, "we are looking for the fourth member of our team -- our chief representative in China."

Harry Huang, who formerly held the position, left the bourse in April due to "a strategic change at NASDAQ."

Before that, Huang and his assistant were the only staff members in NASDAQ's Shanghai preparatory office, which was established in 1998.

"We need ... a country-based representative for the China business," Patterson said.

NASDAQ, he added, expects the representative to be familiar with Chinese customers, Chinese culture, the country's capital market and the NASDAQ.

"I have met many candidates, and most of them are very well qualified. In particular, 90 per cent of these interviewees are Chinese nationals," he said.

NASDAQ's senior officials previously denied the bourse would shift its focus to the US domestic market. They also denied -- in response to comments by Huang -- they would stop the process of opening a formal office in China.

"There are a lot of business opportunities in China, in 10 years, 20 years and even longer. And we will honour our long-term, substantial commitment to China," Patterson stressed.

"We will invest more resources in China ... and we are willing to help more Chinese companies access international capital through listing in NASDAQ, smoothly and successfully."

Eleven Chinese mainland companies have listed in the NASDAQ. Seven of those are Internet-based firms.

"We will visit China on a regular basis, and we will meet Chinese companies that want a NASDAQ listing. In particular, we will try to change people's misperception that only high-tech firms list in the NASDAQ," Patterson said.

"NASDAQ is a broad-based market for companies from all sectors, but this was not adequately addressed before."

About 30 per cent of the firms listed in the NASDAQ are in the IT (information technology) sector, while the remaining 70 per cent are from other sectors. For example, 20 per cent of the firms are from the finance sector; 18 per cent, health care; and 10 per cent, industries.

Patterson said it is encouraging that more companies from sectors other than IT are either listing or preparing to list in NASDAQ.

"We already have four new listings from the Chinese mainland this year ... one is from a sector other than the Internet."

Patterson was referring to China Automobile Systems Inc.

Another five companies from the Chinese mainland are preparing to list in the NASDAQ, he said.

Dass said those five firms are from the pharmaceutical, manufacturing, banking and finance and ITsectors.

He declined to name the firms.

Several Chinese companies in the agriculture, automobile, manufacturing, finance and pharmaceutical sectors have discussed possible listings with NASDAQ's officials, Patterson said.

NASDAQ and the New York Stock Exchange (NYSE) are competing to attract large-scale, State-owned enterprises, Patterson said.

"First and foremost, we are the world's most liquid stock market," he added.

The NASDAQ has a daily trading volume of 12.5 million shares, almost four times that of NYSE's 3.5 million shares per day, even though NASDAQ is smaller, in terms of the total market value of the stocks, Yandle said.

The value of NASDAQ's stocks is US$6.5 billion, while the value of NYSE's stocks is US$75 billion.

"Liquidity is the key to the performance of companies' stocks," he noted.

Compared with NYSE, NASDAQ charges lower entry and annual fees for listing. Also, NASDAQ is superior in its executive capabilities on behalf of investors in daily trading, Yandle said.

Commenting on the launch of the second board, for small and medium-sized enterprises (SMEs), in Shenzhen earlier this year, Patterson said the decision was "a good idea, positive and complementary to NASDAQ market."

"We are very enthusiastic to see the development of China's capital market ... and we are fully prepared to help those Chinese companies listed in the SME board to list in the NASDAQ," he said.

Many Chinese companies want to enjoy high visibility and an enhanced profile in the world with a NASDAQ listing, he added.

Although NASDAQ officials have been encouraging non-US companies to list in the market, about 230 non-US companies have done so since 1999, Patterson said.

NASDAQ, the world's largest electronic stock market has four overseas offices -- in London, Tokyo, Shanghai and Bangalore, India.