Capital markets: How to enter China
Foreign banks hoping to break into China’s capital markets will have their chance at the end of 2020, but muscling in on primary capital markets could prove expensive and risky.
By Rebecca Feng
Foreign banks are rightly excited about their chances of getting unfettered access to China’s capital markets.
They can already own 51% of onshore securities joint ventures – the China Securities Regulatory Commission (CSRC), headed by Yi Huiman, who took over the securities regulator in January 2019 and was determined to open up the domestic market even further, said in October that it would scrap that limit on December 1, 2020.
That offers opportunities for those firms already operating in the market. HSBC and UBS gained majority control of their JVs in August 2017 and December 2018 respectively.
Other JVs are still burdened by a majority partner but are finding a way out. In early November, Goldman Sachs and Morgan Stanley got the nod to lift their holdings in Goldman Sachs Gaohua Securities and Morgan Stanley Huaxin Securities to 51%.
Others plan to expand in China even if they do not yet have JVs onshore or have not had one for years. Societe Generale is setting up a wholly owned securities firm and Nomura’s majority-owned JV has already received a securities business licence, despite not having been through a phase of collaborating with Chinese partners.