Global stock plan fails to wow Asia investors

FOLLOWING THE SUN: While the list of stocks hasn’t been announced, the NYSE’s chairman Richard Grasso estimated on Wednesday that about 400 global companies would meet GEM’s criteria, with half of those from the United States.

The aim, Grasso said, was for "world-class issuers", many of which were not based in the US, "to experience a follow-the-sun approach to the trading of their equities".

He said the Big Board is typically forced to sit on about one million unfilled orders at the close of its traditional trading session at 4 pm EDT each day.

INVESTMENT HABITS SEEN UNCHANGED: Institutional investors in Asia said the idea could in theory boost visibility and liquidity of some stocks, as well as allow for faster trading reactions to after-hours developments, but was unlikely to change their investment practices.

"I suppose it helps retail investors who like trading inand out," said Oscar Wong, managing director at Prudential Portfolio Managers (Asia) Ltd in Hong Kong. "But we’re not, and I don’t feel this is necessary or desirable."

An executive at one of Asia’s largest fund investors said a global market of stocks is far more complicated to set up than currency trading.

"If I’m long dollar-yen, it’s very clean, I can do the transactions; but if I’M Long a stock, for different accounts there may be a structural problem. Where’s the continuous cover of the market. Passing a dealing book from one location to another makes allocations of the trades a problem," he said.

Several investors also said they were unlikely to conduct trades in stocks outside their home listing’s regular sessions due to a lack of liquidity in after-hours business.

"If you look at the foreign listings, most of the time theydon’T mean very much," Prudential’s Wong said. "IBM listed in Japan and the volume hasn’T been great."

RUSH TO CEMENT TRADE TIES: Stock exchanges across the globe have been hurrying tocement alliances as the growth of online trading and liberalisation of fund industries have unleashed new floods of investors.

The NYSE and the Nasdaq Stock Market have been on a sprintto tie up cross-regional deals.

Nasdaq last week kicked off trading in seven key stocks inHong Kong and Nasdaq Japan, a collaboration with the Osaka Stock Exchange that starts on June 19, aims to list the top 20 U.S. Nasdaq firms such as Microsoft Corp.

Microsoft, among the world’s most liquid stocks, couldnumber among the "world-class issuers" in GEM. So could General Electric Co., Japan’s Toyota Motor, Financial firm HSBC Holdings of Hong Kong and Australian telecommunications firm Telstra.

All told, the three Asian exchanges will make up $5.5trillion or about a quarter of the proposed mega market.

Unquestionably, the alliance is a publicity boost for themarkets inclued, and perhaps a detriment to those that weren’T.

Companies concerned about thin investor exposure to theirstocks may also welcome the news, Murchison of Templeton said. "There’s a resource company in Australia that might consider re-listing in New York or London in order to allow them to compete for capital on an equal footing. This (market) would make a difference to those companies."

Said Daniel Poon, head of equity sales in Asia for DeutscheBank: "It is doable, but it will take a long time. There are a lot of operational differences, and the important issues are settlement arrangements and regulatory differences."