The Chinese government said it would lift a one-year moratorium on foreign investment in the securities industry, now that local brokerage firms have strengthened their finances, Bloomberg reports.
“After the completion of a three-year restructuring of the domestic brokerage industry, we will resume reviewing the applications for joint ventures,” says Shang Fulin, chairman of the China Securities Regulatory Commission.
China is giving global investment banks greater access to its equity market, the fastest-growing in the world, after a two-year stock rally helped revive local brokerage houses. But Chinese securities firms still are not strong enough to square off against the likes of Goldman Sachs, said Liang Jing, an analyst in Shanghai with Guotai Junan Securities.
“The opening up will have a huge impact on domestic brokerages,” Liang says. “The restructuring has lifted the competitiveness of the industry, but they aren’t able to compete with the global securities companies yet. Domestic brokerages won’t want this.”
Foreign investment banks will be allowed to buy stakes in fully licensed domestic brokerage firms, Shang said.
Jing Ulrich, chief China strategist for JPMorgan Chase, adds: “The opportunities in China’s financial markets are enormous. It is one of the top three fund-raising centers in the world.”