Nasdaq doesn't want to become the latest battlefield of the year-long trade war between Washington and Beijing, amid reports that the Trump administration is exploring ways to limit China’s access to the U.S. capital markets.
Adena Friedman, the CEO of Nasdaq, said it is best for the U.S. to keep the door open to Chinese companies at Yahoo Finance All Markets Summit in New York City on Thursday, citing intense competition among exchanges to lure Chinese names.
“If Chinese companies are no longer able to access U.S. markets, you know, their opportunity would be to go to London or to go to Hong Kong, so they do have other avenues, or to list in China,” Friedman said. “So, we have to look at it as it's in our interests and our economic interest to keep our markets open, to continue to be that land of opportunity, and to make sure that we maintain our role as the most resilient and most dynamic markets in the world.”
China has launched its own Nasdaq-style tech board in July, in the hope to keep homegrown companies in the domestic capital market. The Hong Kong Exchange has also changed its rules on the dual-class structure to lure more tech companies.
Friedman, who runs one of the largest exchanges in the world, called it “good news” that the Trump administration said limiting Chinese IPOs is not on the table at the moment. Nasdaq has helped launch some of the biggest tech companies in the world and has increasingly become a top choice for Chinese companies for flexible listing rules. Last year, 33 Chinese companies went public in the U.S., hitting an eight-year high.
Friedman also said that Nasdaq is under statutory obligation to be non-discriminatory to companies in terms of country origins. But unlike most foreign players, Chinese companies don’t comply with the oversight requirements on its auditors, because the Chinese law requires financial records to remain within the country to protect national security and state secrecy. Two bipartisan bills introduced this year aim to delist Chinese companies that don't comply with U.S. auditing rules.
Despite the increasing risks, Chinese companies, including e-learning company Youdao and online insurance provider Huize Holding, have recently filed U.S. IPO requests.
“We are seen as the land of opportunity and we want to continue to be seen as the land of opportunity for companies from all over the world to come and get access to U.S. investors,” said Friedman.
Krystal Hu covers tech and China for Yahoo Finance. Follow her on Twitter.