London Exchange Opens Beijing Office

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BEIJING — The London Stock Exchange opened a Beijing office Friday, stepping up its rivalry with U.S. markets to attract listings by fast-growing Chinese companies expanding abroad.

The opening of the office came as British Prime Minister Gordon Brown was making a visit to Beijing.

The LSE offers Chinese companies access to a global pool of investors and the European Union market, as well as lower costs than U.S. markets, said Chief Executive Clara Furse. The London exchange currently has listings by 68 Chinese companies.

"London is the natural home for Chinese that want to demonstrate their international credentials," Furse told reporters. "We're at the beginning of a very powerful story here."

Chinese companies have raised billions of dollars abroad in New York, London, Hong Kong and elsewhere. The LSE says 17 Chinese companies joined the exchange last year, raising $1.9 billion.

Brown said Britain aims to double the number of Chinese listings on the LSE, but gave not timeframe.

"I am asking the Chinese government to consider removing restrictions on Chinese companies raising capital overseas, so that far more of them can benefit from the advantages of listing in London," he said in a speech to the UK-China Business Summit.

Dozens of Chinese companies have shares traded in the United States, and both the Nasdaq market and the New York Stock Exchange have offices in Beijing to pursue new listings.

Beijing is pushing its companies to "go global," encouraging them to do more business and raise investment abroad in hopes of reducing China's reliance on export-driven manufacturing.

But regulators have also recently been pushing China's elite companies to sell shares on domestic exchanges in hopes of improving the quality of investments available to ordinary Chinese. China's biggest initial public offerings last year were on mainland exchanges or in Hong Kong, a Chinese territory that regulators treat as a foreign economy.

Furse said the LSE will not compete directly with Chinese exchanges.

"We provide access to a different liquidity pool and different investor base. As Chinese internationalize, they will want access to the euro zone, which we offer," she said, referring to the market of 300 million consumers that uses the European currency.

Furse declined to say how many Chinese companies the LSE expects to add this year. She said the Beijing office will pursue listings from a wide range of industries.

One of London's selling points is lower costs than the United States for regulatory compliance and fewer lawsuits, Furse said.

Some Chinese companies have reportedly avoided listing shares on U.S. markets due to the cost of complying with the Sarbanes-Oxley Act, enacted in 2002 following a series of corporate scandals.

"The cost of London is significantly lower than the U.S.," Furse said. "The U.S. market is very litigious, in fact is remarkably litigious, and that just is not so in the U.K."

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