Shares in Nasdaq-listed US technology giants Cisco Systems Inc, Dell Computer Corp, Intel Corp and Microsoft Corp, could be trading on the Stock Exchange of Hong Kong as early as February, following a co-listing deal between the two exchanges. Selected Hong Kong technology stocks will be then be given Nasdaq listings later in the year, but the timetable and selection of stocks has yet to be finalized, an SEHK official said.
Reactions to the deal have been mixed. Some Hong Kong brokers welcomed the news, saying that Hong Kong and Asian markets have been waiting for quality high-tech stocks. But others warned of the risks involved for Hong Kong investors because of the time difference between Hong Kong and New York.
Ricky Tam, chairman of the Hong Kong Institute of Investors, said: Investors should not trade in such a way because they would seldom get fair prices. Nasdaq-listed companies make corporate announcements during trading hours in the US when Hong Kong’s market is closed. Investors trading in the SEHK would not be able to react to such news in time, Tam said.
Also getting a mixed reception is the stock exchange’s suggestion that it might implement a market-maker system for the Nasdaq companies trading in Hong Kong. Market makers who quote prices for stocks will help investors to enter and leave the market, said SEHK chief executive Alec Tsui. This will help ensure the liquidity of the Nasdaq companies when they list in Hong Kong next year. However the exchange’s vice chairman, Stephen Hui, is opposed to the idea. It is unfair to introduce the market-maker system for the Nasdaq firms while the system is not applying to other local companies, he said.
Most brokers felt the market-maker system would be unnecessary. Credit Suisse First Boston Pacific region vice-chairman Alan Smith said only new counters required market makers to ensure their liquidity. Microsoft, Intel and Dell Computer are well-known companies. I don’t think market makers are needed to promote the trading of these stocks, he said.
Frank Zarb, chairman of the National Association of Securities Dealers, Nasdaq’s parent, said co-listing shares would boost the liquidity of the stocks involved, making it easier for investors to buy and sell them at attractive prices. Quality companies will get to be better known in Asia, Zarb said. With better local coverage, that should benefit these companies materially.
