Limits on foreign shareholding in securities and fund management companies scrapped
April 7, 2020 Category China News Round-up, Weekly
China scrapped the limitations on the ratio of foreign shareholding in securities and fund management firms, a move that shows a 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 abolition of the limits on foreign ownership in securities firms came after a March announcement by the China Securities Regulatory Commission (CSRC) to advance the time for the move originally scheduled for this December.
Morgan Stanley said it had received CSRC approval to increase its shareholding in its China securities joint venture, Morgan Stanley Huaxin Securities Co, from 49% to 51%, while Goldman Sachs obtained approval to increase its ownership in its China joint venture, Goldman Sachs Gao Hua Securities Co, from 33% to 51%. The approvals increased the number of foreign-controlled joint venture securities firms in China to five. The other three are Nomura Orient International Securities, JP Morgan Securities (China) Co, and UBS Securities. DBS Bank has also applied for the establishment of a majority-owned 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 ex-Japan, adding that the company will now seek to move toward 100% 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.
Asset management companies such as BlackRock, Fidelity, and Schroders, 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 four-fold in the next 10 years,” said Jackson Lee, Country Manager in China for Fidelity International, the Shanghai Daily reports.
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