The gloves are well and truly off in the battle between global exchanges to attract Chinese companies to list. This week the London Stock Exchange alongside the UK Trade and Investment Bureau held a series of events aimed at getting more Chinese companies to list in The City.
Admitting that London had not been as forthright as it could have been in the past, Jane Zhou, the LSE's Asia Pacific chief noted that "perhaps we have been too English and too gentlemanly and we have not marketed [ourselves] as strongly as the NYSE or Nasdaq."
That appears to now be changing. Zhou also suggested that because most of the big global investment banks are primarily US firms and that there are very few UK investment banks left, there is an institutional bias towards going to New York instead of London.
The LSE hosted an evening drinks party on Monday for 20 mainland companies, which are seeking listings and it was hoping that if convivial hospitality would not do the trick then perhaps the facts and figures would. Zhou pointed out that London is the most liquid market for international equities in the world with $3.25 trillion of trading compared to $1.08 trillion in the two main US markets. Furthermore there are $499 billion of international assets under management in London, more than twice the $210 billion amount sitting in New York.
When it comes to listings, Zhou also claims that London is much cheaper than the US. As London charges a percentage fee for both admission fees and for annual fees, the prices can vary a lot. But, she says, for admission companies pay between $7,113 and $355,618 in London versus $150,000 and $250,000 for the NYSE. For annual fees, companies pay between $9,482 and $28,449 in London but between $35,000 and $500,000 on the NYSE.
But for Zhou perhaps the biggest strength that LSE has is the fact that companies listed there are not beholden to Sarbanes Oxley. Zhou says that she regularly speaks to the bosses of Chinese companies, particularly those that are government owned, and the CEOs and CFOs "don't want to be liable for ...verification... and then go to prison for three years and be fined." She adds, "Sarbanes Oxley has caused many problems for companies. It's very onerous and troublesome. We see this as an interesting opportunity for London."
In a further piece of excellent spin doctoring , Zhou put a rosy gloss on the current battle for ownership of the LSE between Deutsche Borse and Euronext. She noted that this was just "part of the consolidation of the European equity market" and that "it could only help potential issuers as a consolidation of liquidity."
Such aggressive marketing from such a venerable institution as the London Stock Exchange shows the importance of Chinese listings for the global market. The LSE used to try to get listings from 30 different countries. Now it is focusing on just four: the UK, China, India and Russia.
All this effort seems to be paying off. In October last year, Ai rChina became the first mainland company to have a dual listing in Hong Kong and London. This is on top of the eleven Chinese companies that have their main listings in London.
In recent weeks, it has also been reported in the mainland press that senior executives from four Chinese banks seeking listings this year will not be going to New York. Bank of China, China Minsheng Bank, Bank of Communications and China Construction Bank have all decided to list in Hong Kong and not do a dual listing on the NYSE. It will be up to Zhou to persuade them to list in London instead.
