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KRX Lures Mainland Investors

Korea Exchange (KRX) has joined the fierce competition among international exchanges to secure mainland listings.


Young-tak Lee, chief executive of KRX, attempted to persuade Chinese companies in different sectors into listing with KRX on its December 6 press report, using a set of figures to demonstrate KRX's advantages over other stock exchange bourses, namely lower exchange fees and shorter application times compared with the New York Stock Exchange (NYSE) and the Hong Kong Exchange (HKEx).


Lee pointed out that the similar industry structure and close economic relationship between South Korea and the Chinese mainland makes it a lot easier for Chinese firms to list on the KRX.


He added that KRX has not required government approval in the application procedure.


Currently no foreign companies are listed on the KRX but it is optimistic that Chinese firms will change this. Representatives from the exchange have visited Beijing, Shandong and Zhejiang in order to promote the exchange. According to Lee, KRX is in talks with several Chinese companies who intend to list overseas, but he refused to give any details.


However, it could be a tough task for the late-comer to secure mainland listings since foreign competition is growing among international exchanges as the funding demand from Chinese companies grows in sync with the continuing boom expected for the next 10 years


Last year October's opening of the London Stock Exchange's (LSE) Asia-Pacific office in Hong Kong only added to Chinese firms' list of options.


Currently the LSE has six mainland companies listed with a further 20 from Hong Kong, and an additional 10 Chinese companies are listed on the AIM (alternative investment market).


Meanwhile, New York's more receptive position to mainland listings has given it something of a head start where nine mainland companies listed in New York last year alone. There is additional competition for KRX from within the Asia-Pacific region from Hong Kong, Singapore and Tokyo.


HKEx, which accommodates the largest number of mainland companies, apparently cannot afford to miss an opportunity to attract a mainland listing.


KRX, based in Pusan, was created through the integration of the Korea Stock Exchange, the Korea Futures Exchange and the Second Board in January 2005. The merged exchange is transforming itself from a mere local exchange to an important part of the world's financial market.


According to KRX, by October 2005, the total market value of KRX reached US$575 billion and ranks 14th in the world with a total exchange volume is US$902 billion, ranking the ninth of the world.


(China Daily December 7, 2005)


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