JP Morgan, Morgan Stanley get Chinese regulator nod to form joint ventures
08 Jan 2011
JP Morgan Chase and Morgan Stanley said yesterday that they had each received the Chinese authorities' nod to form joint ventures in the country, which would allow them to target a larger share of the booming securities business in China.
With the approval, the two firms have won the right to partner with local players to underwrite stock and bond offerings in China. The joint ventures will be able to offer stocks to Chinese investors.
According to JPMorgan, it plans to join with First Capital Securities and hold a 33-per cent stake in the new firm they establish, while Morgan Stanley said it would take a 33-per cent stake in the joint venture it plans to set up with Huaxin Securities, also known as China Fortune Securities.
Though the Wall Street majors have long been helping Chinese companies list shares on foreign stock exchanges in New York and Hong Kong, their operations in China's domestic market have largely been restricted, which they find frustrating.
At the moment though, Wall Street banks seem be fine with forming joint ventures. Goldman Sachs in 2004, received the go ahead to form a Chinese joint venture - Gao Hua Securities - while UBS, Credit Suisse and Deutsche Bank have each formed a Chinese joint venture with a local securities firm in recent years. The firms hold minority stakes in the ventures.
China the world's second largest economy and the biggest market for initial public offerings, naturally holds a special attraction for Wall Street.
