East Tech West

Nasdaq would be 'very blessed' if US attracts 50 Chinese IPOs every year, SVP says

Kevin Shalvey
Key Points
  • A key Nasdaq executive said his exchange would be "very blessed" if 50 Chinese companies hold initial public offerings in the U.S. each year.
  • Nasdaq this year lowered its expectations for new issues from Chinese firms to "mid-30s" from the more than 40 it had planned for.
  • Company sustainability is seen as an "wave" that will crash into U.S. markets in the near future.
Nasdaq exec: You need to like the investment bank you go public with

Nasdaq would be "very blessed" if 50 Chinese firms listed in the U.S. every year, even though such 2019 offerings are now seen below expectations, Robert McCooey, the senior vice president of its Listing Services unit, told CNBC Wednesday.

U.S. exchanges had expected more than 40 Chinese initial public offerings (IPO) this year, but will round out the year in the "mid-30s," McCooey said at CNBC's East Tech West conference in the Nansha district of Guangzhou, .

Still, that puts U.S. markets in a good range, he said.

"If there were 35 to 50 Chinese companies that came to the U.S. every year from here to infinity, I think we would be very blessed," he told CNBC's Amanda Drury.

Uncertainty from ongoing trade negotiations has affected the overall new-issue market this year, McCooey said earlier this week, adding that a commitment to a "phase one" trade deal between the U.S. and China could remove some of that doubt in the near future.

Both Nasdaq and U.S. officials have this year said they'd like to see increased scrutiny for Chinese companies looking to list on U.S. markets. Nasdaq has reportedly begun slowing down internal processes and approvals for smaller Chinese firms preparing to list, according to Reuters in an article from late September.

Robert H. Mccooey, JR. Senior Vice President of Nasdaq speaks with Howard Zhang, Partner of Davis Polk & Wardwell LLP on Day 3 of CNBC East Tech West at LN Garden Hotel Nansha Guangzhou on November 20, 2019 in Nansha, Guangzhou, China.
Zhong Zhi/Getty Images for CNBC International

In an annual report released this month, the U.S.-China Economic and Security Review Commission urged Congress to add new regulations, including requiring Chinese companies to disclose any financial support from President Xi Jinping's government.

More than 150 Chinese companies were traded on the three largest U.S. exchanges as of February, according to the most recent data released by the Commission. Their total market value at the time was about $1.2 trillion, according to the Commission.

Warning of an ESG 'wave'

The recent push for all companies to be socially conscious and environmentally sustainable is a "wave" threatening to crash into U.S. markets, McCooey also said during Wednesday's wide-ranging Q&A at East Tech West. Some companies haven't laid the groundwork for environmental, social and corporate governance, often shortened to ESG.

"So many of these public companies have been living in kind of a — I wouldn't say a bubble — but they haven't really understood this wave that is about to overtake the markets," he said.

Both ESG and data privacy are at the top of the list of concerns newly public companies are facing, said Howard Zhang, a partner at Davis Polk & Wardwell, who works with pre-IPO firms.

"One thing for the founders to keep in mind," he said during the Q&A, "with the public company status comes the responsibilities."

IPO is not just one transaction, it's a milestone: Expert