The Nasdaq stock exchange expects more Japanese and South Korean startups to list next year, as companies from East Asia look outside their home region to raise cash.
The growth in foreign listings from the two countries is due in part to tighter listing rules on Asian bourses and comes as the Nasdaq strives to improve the quality of its listings with proposed rules that would make it harder for Chinese companies to go public in the US.
There has been a strong pipeline of companies from Asia eager to make their stock market debuts in the US this year, supported by a powerful rally in equities and investor optimism, according to Bob McCooey, vice chairman of Nasdaq, who is in charge of international listings for Nasdaq.
“North Asia is kind of the next place where a lot of companies will come to the US markets. And so I think, on a relative basis, it’s going to be the biggest growth area,” said McCooey on the sidelines of the Chinese Finance Association’s annual conference last month, referring to Japan and South Korea.
McCooey did not share specific names, but noted that companies in industries ranging from technology and fintech to health care and consumer products are among those aiming to go public on the Nasdaq.
A record number of East Asian companies went public on US stock exchanges this year following a lull in cross-border listing activity within the last five years, when high interest rates dampened investor sentiment.
As of November 13, eight Japanese companies and one South Korean company have gone public in the US this year, with all but one listing on the Nasdaq, according to capital markets data analytics specialist Dealogic. The tech-heavy bourse also saw five companies from Taiwan float shares, raising USD 109 million. Nearly all Asian IPOs this year were small market cap companies.
Marcuz Tan, CEO of Boustead APEX, an adviser to Asian companies looking to list in the US, said his company has been helping “dozens” of Asian companies prepare for listings in the US. He expects to see more South Korean companies make their debuts on US bourses next year, as founders of these startups are more globally minded than previous generations of executives.
“There are some still challenges for Korean companies,” Tan said. “They don’t know how to engage with the American market and language skills can be a big challenge.”
Japanese health care and labor consultancy rYojbaba raised USD 5 million in August, while CTW Cayman, a Japanese web-based gaming platform, raised USD 12 million on the Nasdaq that same month.
Enna Weng, managing director at Arc Group Securities, said the Tokyo Stock Exchange tightened listing requirements this year, putting hundreds of companies at risk of delisting. At the same time, incentives to look overseas have grown. “Japanese corporate governance reforms have also improved investor perceptions lately, making US listings more credible,” Weng said. “Many Japanese companies are in sectors—fintech, payments, consumer, global enterprise software—where the US investor base may value them more highly.”
Across Asia, bourses are competing to reform, working to improve access and market quality as authorities race to lure foreign capital and enhance protections for retail investors. The threat of losing out to the US on promising IPOs by domestic companies is another spur to reform. US markets generally offer greater liquidity and transparency, as well as better funding opportunities.
In Southeast Asia, Singapore came up with a way to share new listings with Nasdaq. The Singapore Exchange is engaging Nasdaq to launch a program where startups can be publicly listed simultaneously on both bourses. The scheme is expected to be available from the middle of next year.
McCooey added that SPACs, or special purpose acquisition companies, have made a return this year. According to global consultancy EY, SPACs made up a sizeable share of listings this year.
Harvard Ave Acquisition, a South Korean SPAC led by Plutus Partners, listed on the Nasdaq in October.
Nasdaq’s pipeline of listings in the past was mostly filled by Chinese and Southeast Asian companies. “Now it’s migrated north,” McCooey said, adding that he has been working to attract Middle Eastern companies beyond Israel to list on the Nasdaq.
Asian companies have led foreign listings in the US, but they tend to raise less money than their US counterparts. So far this year, 113 startups from Asia raised USD 2.58 billion from US listings, accounting for 57% of all IPOs. Non-Asian companies, including US firms, raised USD 59.6 billion. In 2024, there were 79 US share listings by Asian companies. China and Hong Kong continue to dominate among Asian company listings in the US. There were 57 companies from the two jurisdictions that began trading in the US this year, as of November 11.
But this year, Chinese companies have been caught in stock “pump and dump” schemes, in which investors artificially inflate a company’s share price before unloading their stakes. The problem, which plagued the US market in 2020 and 2021, prompted Nasdaq to propose new regulations, which are currently under review by the securities regulator. The rules would raise the minimum float to USD 25 million for Chinese issuers.
“We want there to be more liquidity in the market. We think it benefits everybody, investors, corporates, to have more liquidity in the market. So therefore, we know that the ability to raise the standards was very important,” McCooey said.
Weng said there has also been growing interest in Japanese and other Asian issuers from small-cap investment banks, as recently proposed rules are expected to make it more difficult for Chinese companies to list in the US.
With tensions between the Washington and Beijing running high, big Chinese deals in the US have been scarce. Beverage chain Chagee raised USD 411 million in April and market watchers believe Hong Kong-based travel booking platform Klook will raise up to USD 400 million after it filed to go public recently.
Hong Kong has overtaken the US as the go-to IPO venue for Chinese startups, which require approval from the China Securities Regulatory Commission (CSRC) to list offshore. Applications for companies hoping to list in the US have been held up for months, according to lawyers and advisers. “Companies have not been obtaining CSRC clearance for the past several months, which has created a backlog of companies waiting to complete their IPOs,” said Megan Penick, a cross-border capital markets lawyer at Dorsey & Whitney.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.