This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Foreign IPOs Rise

U.S. exchanges are getting more and more foreign listings, even if there's some concern about their missing out on the biggest ones.

During the first quarter, 19% of the 67 initial public offerings on the New York Stock Exchange (NYX), the Nasdaq Stock Market (NDAQ) and the American Stock Exchange were foreign-based, according to Dealogic. That's up from 16% for all of last year.

This year is on pace to add the most foreign listings on U.S. exchanges since 1997, when 86 overseas companies completed IPOs in U.S. markets, according to Thomson Financial. Foreign companies accounted for 23.4% of IPO proceeds last year -- the highest since 1994, Thomson Financial says.

The gains come in spite of worries about U.S. securities laws possibly scaring away big foreign deals. China Construction Bank raised eyebrows in late 2005 when it raised $9.2 billion in an IPO on the Hong Kong Stock Exchange. The Industrial and Commercial Bank of China made history just last November when it raised $22 billion through listing shares in Hong Kong and Shanghai.

Observers cite the growth of Asian and emerging markets in general. U.S. investors want more international exposure, particularly from companies based in fast-growing countries such as China and India.

"U.S. investors might be willing to pay a higher value than domestic investors" for foreign companies, says Jay Ritter, a finance professor at the University of Florida. Ritter says the globalization of the capital markets and improved clearing at many exchanges are adding to the foreign-listing appeal.

For the most part, foreign companies are doing fairly small IPOs and are primarily in the healthcare, tech and media sectors.

Shares of Chinese solar power company JA Solar (JASO) rose 18.6% on their first day of trading in early February and are up 30% to date from its IPO price, Dealogic says. Greek tanker operator Capital Product Partners (CPLP) jumped 24% in its debut and has since held steady.

But every deal hasn't been a success. Shares of Israeli cell phone company Cellcom Israel (CEL) fell 2.3% in their February debut and are down 7% from the IPO price, Dealogic says. Chinese media and advertising company Xinhua Finance Media (XFML) dropped 12.6% in its March 9 debut and is off 21% from the IPO price.

Still, Charlotte Crosswell, head of Nasdaq's international listings efforts, says the exchange has seen "certainly a lot more interest from other parts of Asia," including Korea, Taiwan and Vietnam.

As a result, Nasdaq is devoting more resources to persuade these companies to list on the exchange. Nasdaq recently hired Michael Oxley, the former congressman, as vice chairman to boost listings.

"We believe those new markets will hopefully build out our pipeline over the next few years," Crosswell says.

NYSE is also looking to gobble up more foreign issue listings. The Big Board is heavily promoting its sister exchange, NYSE Arca, which is targeting smaller companies that might not be able to meet the requirements of the main exchange. But even those companies that do not want to list on either U.S. exchange will now have a third option -- Euronext. NYSE completed its merger with the European exchange operator on Wednesday.

Some foreign companies are already warming up to the corporate governance rules under Sarbanes-Oxley, despite claims in some quarters that the rules are a deterrent to listing in the U.S. Some smaller companies have been choosing exchanges with less rigorous regulatory requirements, such as the London Stock Exchange's Alternative Investments Market.

Many U.S. issuers have whined about the high cost and cumbersome rules associated with Section 404 of Sarbanes-Oxley, which mandates extensive regular reviews of companies' internal controls.

But a foreign company that proves it is willing to comply with the U.S. rules and regulations is likely to get better access to capital, Crosswell says.

"In China there is a more neutral perception of Sarbanes-Oxley," she says. "The companies here are slightly younger and have been putting in process and controls at a very early stage. The process hasn't affected them as much as big multinationals that had to start from scratch."

The path might also be getting easier for companies to comply with Sarbanes-Oxley. The Securities and Exchange Commission is working to ease some of the costs associated with Section 404.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs