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Below is the transcript of a CNBC Exclusive interview with Bob McCooey, Chairman, NASDAQ Asia-Pacific. The interview was first broadcast on CNBC's Squawk Box Asia on 12 December 2018.
All references must be sourced to a "CNBC Interview'.
Interviewed by CNBC's Akiko Fujita and Sri Jegarajah
Akiko Fujita (Akiko): Bob McCooey is the Chairman for Asia Pacific at NASDAQ and Bob, you just reminded me, this is what your 8th trip here to Asia.
Bob McCooey (Bob): Yes, this is just this year. People say I've been here before and I say what probably the Hong Kong, Beijing, Shanghai a100 times each.
Akiko: That seems to point to how fiercely you're competing because when you when you look at what happened here in Hong Kong this year it's been a big IPO year, changes in the listing rules as well the dual class share listings allowing for a lot of the tech names to come to market too. It's got to be a lot of competition for you.
Bob: They've had a strong year. I mean I actually was here almost exactly one year ago. We had had 26 listings in the U.S. from China. And I told people who were interviewing me at the time that I thought there would be three dozen and we'll have 40 in the U.S. this year so most my colleagues laughed at me because they thought that there was no chance that we could continue to grow. And the reason why I've been here eight times and I'll probably be here times next year is because the pipeline that was strong last year actually looks stronger going into 2019.
Akiko: One of the biggest competitions has been for some of the Chinese tech names a lot of them that came to market here in Hong Kong and what I've heard from a lot of these companies when we say well how do you decide whether list here in the region or over in New York is that you know they get the sense that maybe shareholders and investors have a better sense of what their company is doing and the structure of the company here in Asia as opposed to maybe some American investors. What's your pitch when you meet with some of these companies?
Bob: Well, first of all we did have two of the largest IPOs with Iqiyi, Pinduoduo book list with us two of the top three tech names in the U.S. were from this region. And we talk about the fact that we have the services to help companies transition from private to public. It doesn't matter which part of the world you're listing in. We have those services, we support companies. We have excellent trading one of the most important things about a company is aftermarket liquidity and the strongest liquidity in the world has always been in the U.S. markets and so we talk to companies about that but we also don't come to Asia specifically to China to try to convince companies who should be in the local markets not to be in the local markets. There are small group of companies who will decide to list somewhere else besides the local markets here in Asia. And we've vigorously pursue them and believe that they belong on Nasdaq.
Sri Jegarajah (Sri): Bob the trade tensions are unavoidable do you think that is going to stifle the number of Chinese tech firms looking to come to market in the U.S and on the NASDAQ.
Bob: It's the question that I get in every single meeting. Mostly from corporates and then certainly from the investor community. The sponsor community who own the companies here in Asia and it hasn't slowed them down. Most of the companies that are going to come to the U.S. are not going to be in the sectors that are affected by this trade war or at least directly affected by the trade war. And we really haven't heard over the past three months and I haven't heard in my meetings any of the companies delaying their plans or slowing down plans because of the trade war.
Sri: Ok, there have been perennial questions though Bob about accounting standards of the Chinese tech firms that are listed or going to be listed in the U.S. has that question been squared away to your satisfaction?
Bob: All those questions date back now almost a decade and they change the rules in the U.S. to prevent some of the problems that occurred during the kind of 2008 to 2010 period of time. And today what we're seeing is larger companies stronger companies, companies that are much more mature and they're being backed by some of the largest investment banks in the world. So we really don't have any serious concerns about the quality of the companies that are coming to the U.S. markets.
Akiko: And Bob you've had a banner year when it comes to biotech companies listings. And on that front to your most recent listing that you saw on the NASDAQ Moderna this was your biggest as you point out listing and yet we saw the stock drop when 19-20 percent on the first day. Does that maybe a sign that the party is starting to wind down?
Bob: I don't think so. We've had a number of other companies that haven't performed exceedingly well on their first day of trading after. Remember that the 600 million or over 600 million that Moderna raised went into their bank secondary trading is going to happen and that's based upon those that didn't get shares and those that thought that there might be a pop and might not have seen that on the first day and decided to sell out of the shares that they were allocated the night before so there's a lot of different reasons as well as the kind of choppy market that we've had. So they did come to market on a very very difficult day in the market. So I think a lot of factors weighed in on why they may not have had a tremendous first day performance. We try to focus on the long term. Sure Moderna is focused on the long term also.
Akiko: And some of the volatility we've seen in the markets have forced some of the companies here in Asia to potentially delay their listing and we were expecting the likes of Ant Financial as well as a Didi Chuxing to list here. Over in the U.S., you've got a big year ramping over what appears to be a big year. Uber and Lyft already filing the paperwork is sort of hinting that yes they will in fact come to market. What's your sense in terms of the appetite for these big tech IPOs in a time of such volatility in the market.
Bob: So 136 IPOs on NASDAQ last year over 180 this year. I'm not going to say that we'll do well over 180 next year but it feels like both from here as well as domestically that the IPO market will continue to be very very strong. The trade tensions trade war we'll find a resolution of whether that's in the short term or the medium term there will be one. The markets continue to have strong underpinnings and we firmly believe that companies continue to be much more mature ready in their lifecycle to come public and the confidence that 180 companies put in us this year to come to market give confidence to another 180 or more next year to potentially come to market too. And so we see this as kind of self-fulfilling at some level that companies will continue to want to tap the IPO markets.
Sri: Bob, can you give us your read on what market conditions will be like next year and how much more volatility do you reckon can we expect and do you think it is the algoes (algorithm), is it the machine trading and the quant strategies etc. that make the markets including the NASDAQ to be more risky and volatile?
Bob: Well I'd say that there is no-between the two markets in the U.S. there's no one that's more volatile than any other. Volatility is based upon individual factors of a company and certainly the overall macro trends to one of the things that's important to note is that I wouldn't be sitting in this seat I'd be sitting in a different one if I could tell you where the market is going to be three months six months or a couple of years from now. But I think that we will continue to see some short term volatility in the market which may have companies that are on file continued to use their optionality they have of being confidentially filing before actually moving forward. We also are in a time period where companies will wait till they get their year-end numbers in in February and then potentially go on the road in March-April-May rather than rush out read out after the first of the year. So I think it will be interesting to see what the next year portends. But from all factors that I see from all the signals that we have at NASDAQ we think that it will continue to be a very strong one even in the face of the volatility. A lot of traders like to say that the market climbs the wall of worry. And we certainly will. We'll see that within the IPO market.
Akiko: Ok Bob, great to have you on on this side of the world. Maybe we'll see you again before year-end given your travels. Bob McCooey from NASDAQ joining us here in Hong Kong.
Communications Manager APAC, CNBC International
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