China Merchants unit links with London bourse
China Merchants Securities (UK) celebrated becoming the newest Chinese member of the London Stock Exchange last week, a milestone that highlights the increasingly close financial links between China and the United Kingdom.
As a member of the LSE, the company, which is also known as CMSUK, will be able to help clients trade in the diverse selection of financial products listed on the LSE, which include stocks and bonds.
The LSE now has 12 members from China, including Bank of China International, China Construction Bank and GF Financial Markets.
“Being a member of the LSE will (help us to) provide Asian investors with a rich selection of products and capabilities to directly participate in Europe’s largest stock exchange,” said Zhang Wei, chief financial officer of CMSUK.
“At the same time, it is favorable to consolidate the advantageous position of the relevant businesses of CMS International to serve the Belt and Road Initiative.”
Brian Schwieger, co-head of equities, exchange-traded funds and fixed income at the LSE, said: “Welcoming CMSUK as a member firm is another step in our journey towards greater collaboration and partnership with China. It underscores the unique and increasing appeal that London holds as the venue of choice for Chinese investment, trading and capital raising.”
China Merchants Securities is one of China’s oldest and largest securities houses. It established a UK subsidiary in 2013 and, during the past few years, has helped clients to trade commodities through the London Metals Exchange and Intercontinental Exchange.
China Merchants Securities’ latest UK milestone comes as the LSE continues to develop its links with China, with preparations for the highly anticipated Shanghai-London Stock Connect well underway.
The connect has attracted great interest among Chinese investors looking to diversify their portfolios by purchasing overseas stocks, and from global investors looking to buy into China’s high-growth companies.
The connect will work by allowing companies listed on Shanghai and London’s respective stock exchanges to cross-list depository receipts on the other exchange.
Through this arrangement, Chinese and Western investors will be able to enjoy the same benefits of holding stocks in each other’s markets.
Schwieger said China Merchants Securities’ and other Chinese financial companies’ increasing participation in the LSE’s activities will likely play a crucial role in raising awareness of opportunities in China, and foster London-based investors’ interest in accessing opportunities through the connect.
China Merchants Securities’ closer ties with the LSE are also part of China’s two-way openingup of the securities sector. As of the end of 2018, at least nine mainland securities firms were permitted to conduct cross-border business.
Meanwhile, China has allowed foreign investors to hold a majority stake in mainland securities joint ventures. UBS AG became the first global financial institution to take advantage of the new rule, in December.