Foreign holding limits on financial firms lifted

CHINA scrapped the limitations on the ratio of foreign shareholding in securities and fund management firms yesterday, a move that shows wider opening-up of its financial industry.

It gives foreign companies the green light to set up wholly owned units on the Chinese mainland, offering them a chance to better tap the Chinese market. It also provides Chinese investors with a greater variety of financial products and services.

The accelerated pace of China’s opening-up could help boost confidence for global companies, many of which have been hit hard by the coronavirus pandemic and are grappling to mitigate its economic fallout.

The abolition of the limits on foreign ownership in securities firms yesterday came after a March announcement by the China Securities Regulatory Commission to advance the time for the move originally scheduled for this December.

On Friday, Morgan Stanley said it had received CSRC approval to increase its shareholding in its China securities joint venture, Morgan Stanley Huaxin Securities Company Limited, from 49 percent to 51 percent.

On the same day, Goldman Sachs said it had been approved to increase its ownership in its China joint venture, Goldman Sachs Gao Hua Securities Company Limited, from 33 percent to 51 percent.

The approvals put the number of foreigncontrolled joint venture securities firms in China at five. The other three are Nomura Orient International Securities, JP Morgan Securities (China) Company Limited, and UBS Securities.

DBS Bank has also applied for the establishment of a controlling joint venture securities firm in Shanghai.

“This is a significant milestone in the evolution of our business in China,” said Todd Leland, co-president of Goldman Sachs in Asia Pacific exJapan, adding that the company will now seek to move toward 100 percent ownership at the earliest opportunity.

Mark Leung, CEO of JP Morgan China, said the company is eying the same move in its Chinese joint venture.

Along with foreign companies in securities business, world asset management leaders such as BlackRock, Fidelity, Schroders, Neuberger Berman are actively preparing for the application of wholly-owned mutual fund units in Shanghai.

“China’s asset management market is expected to grow more than fourfold in the next 10 years,” said Jackson Lee, country head in China for Fidelity International.

The removal of foreign ownership caps will bring benefits to both global investment banks and Chinese investors, said Toshiyasu Iiyama, head of China Committee of Nomura Holdings.

(Xinhua)