China Brings Forward Welcome Mat For Foreign Investment Banks
China has sped up the opening of its $21 trillion capital market, bringing forward the process by eight months.
Global investment banks such as Goldman Sachs, J.P. Morgan Chase, and Morgan Stanley, will now be allowed to apply to form fully owned units to do a broad array of investment banking and securities dealing in China by April, bringing forward an earlier deadline of December. The decision was included in the signing of a trade deal with the U.S., partially resolving a protracted dispute between the two countries.
«China shall eliminate foreign equity limits and allow wholly U.S.-owned services suppliers to participate in the securities, fund management, and futures sectors,» according to the text of a landmark trade agreement released on Wednesday. Applications from electronic-payments services providers would not take more than 90 days to process, China added.
Resolving The Trade Dispute
China had already committed to a broader opening of its $45 trillion financial markets, which also includes given access to its asset-management and insurance markets.
While Wall Street’s giants and their European peers have been present in mainland China for decades, they have until now had limited opportunity to do direct business, having had to operate through joint ventures with local partners. Full ownership would be a final step after they were given the go-ahead to take majority control over their ventures in late 2018.
Greater Ownership
UBS Group AG, Nomura Holdings Inc., and JPMorgan already hold a majority in their ventures, while the others are in the process of applying for a 51 percent stake. It’s unclear if the application process will now move straight to the 100 percent hurdle.
By dismantling the wall to its financial market, China is counting on foreign financial firms to plow $1 trillion in fresh capital into the nation over the next few years, cushioning a slowdown in the economy and helping a transition to a more consumer-led growth model.
