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QINGDAO TODAY
在线翻译:
szdaily -> Markets -> 
Timetable set to end foreign financial ownership caps
    2019-10-14  08:53    Shenzhen Daily

CHINA’S securities regulator has officially unveiled the time frame for abolishing foreign ownership restrictions on futures, securities and fund management companies, the latest sign that the country is accelerating efforts to open up its finance sector.

Overseas institutions can apply for total control of onshore ventures starting in 2020, the China Securities Regulatory Commission (CSRC) said Friday. The first round of applications for futures firms can begin Jan. 1, while fund management businesses can apply from April 1 and the securities industry will be able to file for 100 percent stakes starting Dec. 1 next year, the CSRC said at a media briefing. The agency didn’t provide further details.

The details come after China brought forward the removal of ownership cap limits for some financial services firms by one year. Regulators lifted restrictions on full foreign ownership of local banks in 2018. China has been opening its financial sector at an unprecedented pace, luring global banking behemoths such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley to compete for an estimated US$9 billion in annual profits.

China is seeking to make it more attractive and convenient for foreigners to buy its stocks and bonds, and having foreign-owned financial services firms is one way to encourage that. Over the coming years, the likely emergence of a persistent current-account deficit will mean the nation needs foreign capital to balance its payments.

“Scrapping the ownership limits will give foreign players an opportunity to better tap the mainland securities markets,” said Wang Feng, chairman of Shanghai-based financial services firm Ye Lang Capital. “But the market will still be dominated by China’s homegrown companies for a few years.”

So far, the 10 foreign-invested joint ventures in the securities sector in China account for only a small fraction of the domestic brokerage business.

“It will take some time before foreign companies can grow big in China to fully compete with their Chinese rivals,” said Ivan Li, an asset manager with hedge fund Loyal Wealth Management. “But competition will eventually benefit companies seeking to raise funds on the stock market.”

At present, domestic brokerages mainly rely on brokerage fees to make profits.

Since announcing its plan to open China’s more than US$40 trillion financial system to overseas companies in November 2017, China has been steadily changing its rules even as the trade dispute with the United States escalated.

Last year, authorities began allowing offshore firms to take majority stakes in the sector. Despite improving access to Chinese capital markets, foreign participation is still just a fraction of overall business.

“Removing ownership caps will help prompt a higher participation of foreign financial firms in China, lure more long-term foreign capital and help with currency internationalization,” said Mark Huang, a Hong Kong-based analyst at Bright Smart Securities.

Even amid the Sino-U.S. trade tensions, Wall Street firms have pushed ahead with building a greater presence in the world’s second biggest economy.

Mark Leung, JPMorgan’s chief executive officer for China, said Thursday that the firm is “going full force in.”

“Our ambition is to ensure we have full ownership,” he said. “That’s the only way we as a firm believe we can really deliver a differentiating client experience through bringing our global scale and product expertise on the ground.”

Since China permitted majority control of financial services firms last year, UBS Group AG, Nomura Holdings Inc. and JPMorgan gained control of local securities joint ventures. Goldman Sachs, Morgan Stanley and DBS Group Holdings Ltd. have applied to follow their rivals.

“China is following through on its promise of financial opening,” said Ding Meng, a senior strategist at Bank of China Ltd.’s Macao branch. “The timetable was moved earlier than expected, which showcases its determination.” (SD-Agencies)

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