SHANGHAI China will raise the ceiling for
foreign investment banks' stake holdings in domestic brokerages
and joint ventures before the year-end, to open the sector
wider to overseas investors, state media reported on Wednesday.
A foreign investor currently can only buy up to a 20
percent stake in a Chinese securities firm, while the maximum
for foreign stakes in Sino-foreign joint ventures is 33
Tu Guangshao, vice chairman of the China Securities
Regulatory Commission, was quoted by state media as saying that
the government plans to gradually raise the ceiling by the end
of this year.
He made the remarks at a domestic financial forum on
Tuesday, official securities newspapers reported.
The U.S. Treasury Department last week announced a series
of reforms that it said China had committed to during the
second round of the U.S.-China "strategic economic dialogue."
As part of those commitments, China will lift a freeze on
the entry of new foreign securities firms and resume licensing
securities companies, including joint ventures, in the second
half of 2007.
Overseas banks looking for new sources of growth are eager
to enter the Chinese market, whose key stock index has nearly
quadrupled in value since the start of last year on surging
turnover. The number of brokerage accounts this week surpassed
the 100 million mark.
Citigroup and Merrill Lynch are tipped to be among the
first beneficiaries of the fresh market opening, industry
analysts said. Others circling the market include HSBC, Credit
Suisse and JPMorgan.
Swiss bank UBS last year won approval to set up a brokerage
business in China via a 20 percent investment in a domestic
firm, Beijing Securities.
Foreign early birds to the market also include Wall Street
banks Morgan Stanley and Goldman Sachs.
Morgan Stanley has long had a leg up on most of its global
rivals in the Chinese market. In 1995, it bought a 34.3 percent
stake in the country's first investment bank joint venture,
China International Capital Corp.
Goldman Sachs owns 33 percent of the Beijing-based joint
venture Goldman Sachs Gaohua Securities Co., which was
established in 2004. CLSA, the investment banking arm of French
lender Credit Agricole, owns a 33 percent stake in
Shanghai-based China Euro Securities Ltd.
China is also studying plans to let domestic brokerages
conduct asset management business under the Qualified Domestic
Institutional Investor scheme, which allows Chinese to invest
in overseas securities markets, Tu was quoted as saying.