In­vest­ment bank­ing sec­tor ‘may be fully open’

China Daily (USA) - - BUSINESS - By LI XIANG lix­i­ang@chi­

China is re­port­edly con­sid­er­ing whether to al­low Wall Street banks to es­tab­lish wholly owned in­vest­ment bank­ing busi­nesses on the main­land, a move an­a­lysts said would give them wider ac­cess to the Chi­nese mar­ket.

The ne­go­ti­a­tions are part of a new US-China trade and in­vest­ment frame­work, the Wall Street Jour­nal re­ported on Mon­day, cit­ing peo­ple fa­mil­iar with the mat­ter.

It re­ported that the de­tails of the plan still need to be fi­nal­ized, and any agree­ment would need to be rat­i­fied by the US Se­nate.

In­dus­try an­a­lysts said such a move would be pos­i­tive for US in­vest­ment banks and over­seas play­ers in gen­eral as it would give them greater ac­cess to the in­vest­ment bank­ing sec­tor in China, one of the fastest-grow­ing mar­kets in the world.

The China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion on Mon­day did not re­spond to China Daily’s en­quiry on this mat­ter.

Over­seas in­vest­ment banks cur­rently can only op­er­ate in the Chi­nese main­land mar­ket by form­ing a joint ven­ture with a lo­cal part­ner. The Chi­nese se­cu­ri­ties reg­u­la­tor lifted their max­i­mum share own­er­ship in a joint ven­ture to 49 per­cent from 33 per­cent in 2012.

Hong Hao, chief strate­gist at BOCOM In­ter­na­tional Hold­ings in Hong Kong, said that the move will likely at­tract more over­seas banks to set up their own in­vest­ment bank­ing busi­ness in China and may prompt some to exit from their ex­ist­ing part­ner­ships with lo­cal Chi­nese se­cu­ri­ties firms.

US bank JP Mor­gan Chase & Co has been in talks to sell its stake in its Chi­nese joint ven­ture with First Cap­i­tal Se­cu­ri­ties Co Ltd. Mor­gan Stan­ley in 2010 left its part­ner­ship with China In­ter­na­tional Cap­i­tal Corp and later formed a joint ven­ture with a new­part­ner.

“Global in­vest­ment banks, as mi­nor­ity share­hold­ers, face a lot of bar­ri­ers and re­stric­tions when they come to mak­ing strate­gic de­ci­sions in the Chi­nese mar­ket. The new­pol­icy will be a pos­i­tive de­vel­op­ment for them,” Hong said.

“The po­ten­tial of the Chi­nese se­cu­ri­ties mar­ket will at­tract more for­eign play­ers to form theirow­nen­ti­ties and the lib­er­al­iza­tion will also help bring more com­pe­ti­tion,” he added.

Cur­rent max­i­mum own­er­ship share

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