Wall Street’s China bet begins to pay off
After years of regulatory setbacks, geopolitical tensions and disappointing returns, major US investment banks are finally seeing the benefits of staying invested in China. JPMorgan, Goldman Sachs and Morgan Stanley are capitalising on a revival in cross-border dealmaking, trading and fundraising as Chinese companies increasingly look abroad for capital.
Some of Wall Street’s biggest banks are beginning to see their long-term China strategies pay off, according to a report by Bloomberg. After years in which China was considered an increasingly difficult market for Western financial institutions, a resurgence in cross-border business is providing fresh momentum for firms that maintained their presence in the country.
JPMorgan Chase has recorded 20% annual revenue growth from its China business in each of the past two years and is on track to double its business in the country by 2030, according to people familiar with the matter cited by Bloomberg.
Morgan Stanley is also benefiting from renewed deal activity. The bank has arranged 11 Chinese share sales and equity-linked offerings worth at least $1 billion so far this year, surpassing its activity during Hong Kong’s previous IPO boom in 2021.
Optimistic outlook
Goldman Sachs is similarly optimistic about the outlook. The bank expects a strong 2027 for its China business, following a high-water mark in 2024, according to Bloomberg.
Chinese companies increasingly look overseas
A key driver of the recovery is the growing internationalisation of Chinese businesses. Companies seeking overseas listings, equity financing and access to international investors are creating opportunities for global investment banks.
The revival is also benefiting trading and brokerage operations. Increased market volatility, changing policy conditions and renewed international investor interest have supported revenues, even as traditional investment banking activities in mainland China remain relatively subdued.
The recovery follows a difficult period for foreign banks, which faced declining profits, regulatory uncertainty and reduced business activity in the aftermath of the pandemic. Some institutions scaled back their operations, while others continued investing in their Chinese franchises.
For those that stayed, the improving flow of cross-border transactions is now creating opportunities to expand market share.
A recovery with important caveats
The renewed momentum does not mean that doing business in China has become straightforward. Geopolitical tensions, regulatory restrictions and competition from domestic financial institutions remain significant challenges.
The recovery is also uneven across international banks. Bloomberg's report highlights the benefits for JPMorgan, Goldman Sachs and Morgan Stanley, while European competitors have faced a more difficult environment.
Nevertheless, the latest developments suggest that Wall Street's China exposure is becoming a more meaningful contributor to business growth again. For the banks that maintained their presence through years of weak returns, patience may finally be paying off.
