Stocks: Red Chips Rule; New York and London want their piece of Asia's biggest market.(New York Stock Exchange, London Stock Exchange)(Cover Story)

Byline: William Underhill

Singapore Inc. may be well placed to invest in Chinese companies, but when it comes to Chinese stock listings, the real war is being waged among the global majors: the New York Stock Exchange, NASDAQ and, increasingly, the London Stock Exchange.

Last week the LSE opened its first office in Hong Kong, with the goal of upping its take of so-called red chips, the Chinese corporate giants. The 210-year-old exchange is selling its global savvy (London leads the world in areas like international bond trading and M&A). But in an effort to compete with the bigger U.S. players, it has also begun pushing the fact that it is more loosely regulated than American exchanges--something that could well appeal to freewheeling Chinese firms.

LSE officials point to a slew of rules, notably the Sarbanes-Oxley Act, imposed on U.S. listings after corporate scandals like Enron. "The U.S. model is very prescriptive," says Tracey Pierce, head of company services at the LSE. London's system focuses more on general principles, rather than detailed rules. That leaves more room for interpretation (and, some say, fudging).

London faces an uphill battle. Since Chinese companies began looking for big money overseas, back in 1993, the LSE has scored only five listings. A few smaller players have opted for Singapore, and several more for Hong Kong. Meanwhile, 16 heavyweights have chosen the NYSE. Thirteen others have debuted on NASDAQ.

Since the U.S. markets control the vast majority of the world's equities, it makes sense for the largest companies to go there. "London gets you a nice international badge, but you are missing out on two thirds of the world's money," says one Beijing-based investment banker. Still, there are rumors that China's flagship carrier, Air China, has bought into the principles-over-rules ...