Nasdaq partners with Shenzhen, eyes China SME listings

SHANGHAI, Oct 16 (Reuters) Nasdaq Stock Market Inc and its Chinese counterpart, the Shenzhen Stock Exchange, have agreed to cooperate as China prepares to launch its own Nasdaq-style market for start-up firms this year.

The smaller of China's two national stock bourses and Nasdaq will enhance their business cooperation and information sharing, said Zhang Yujun, general manager of the Shenzhen bourse.

Nasdaq also expected that Shenzhen bourse, which was preparing to launch China's second board market, would introduce domestic small- and medium-sized companies to list on Nasdaq in the future, said Robert Greifeld, Nasdaq's chief executive, who was in Shanghai for the signing of a memorandum of understanding (MOU) and for a forum of exchange officials.

''That's the possible outcome of the MOU,'' Greifeld told Reuters when asked about further cooperation with its Chinese partner. ''It's part of what we want to discuss with Shenzhen Stock Exchange,'' he said without elaborating.

Last month, Nasdaq won approval from the China Securities Regulatory Commission to set up a representative office in Beijing. Nasdaq is hoping to encourage Chinese firms to list on its technology-focused stock exchange.

Beijing so far has approved just two foreign bourses, including Nasdaq and its bigger rival NYSE Euronext, to open official representative offices in the world's fastest growing major capital market.

Overseas exchanges including in U.K., Germany, Singapore, Hong Kong and South Korea also are intensifying their efforts to woo Chinese companies.

''NASDAQ'' IN SHENZHEN Beijing, meanwhile, is seeking to keep its start-ups at home.

Chinese regulators have said a second board for start-up firms on the Shenzhen bourse is likely as early as this year, helping innovative firms to raise funds as part of Beijing's long-term economic strategy.

''Chinese firms have freedom to choose any market that they want to list ... I think all kinds of listings, including dual listing on both Nasdaq and Shenzhen markets, are very possible in the future,'' said Zhang.

Market sources told Reuters the Shenzhen bourse was in talks with selected start-up firms, including some that are controlled by Shenzhen Capital Group Co, China's largest domestic venture capital fund, for IPO preparations on the new board.

Zhang declined to give a timeframe but said his team was making full efforts to launch the new market as soon as possible without concern for the ''absolute number'' of listed firms at the beginning.

''Thanks to our country's fast economic growth in the past five years, now we can see a very rich pool of qualified start-up firms to list on the new market,'' Zhang said.

Nasdaq also signed a memorandum of understanding several years ago with the Shanghai Stock Exchange, where most Chinese heavyweights such as Sinopec and Industrial&Commercial Bank of China are now listed.

But Greifeld said the agreement with the Shenzhen market will focus more on cooperation with China's small firms and start-ups, which might better fit Nasdaq's market style.

REUTERS DKS DB1258