Sat, May 12, 2018 - Page 10 News List

JPMorgan interested in Chinese firm

GROWTH STRATEGY:As well as acquiring a controlling stake in the securities venture, the bank also plans to expand its equity research team covering Chinese companies


JPMorgan Chase & Co submitted an application to acquire a majority stake in a Chinese securities venture, following UBS Group AG and Nomura Holdings Inc in seeking to take advantage of Beijing’s latest commitment to open its financial markets.

JPMorgan Brokering (Hong Kong) Ltd is seeking permission to take a 51 percent stake in a local entity, China Securities Regulatory Commission spokeswoman Gao Li (高莉) said in a statement late on Thursday.

The regulator will review the application “efficiently” in accordance with the law and regulations, the statement said.

The move comes after JPMorgan chief executive officer Jamie Dimon visited China this week and expressed hope that mounting trade tensions would not derail the US bank’s plans to expand in the world’s second-largest economy.

Dimon, 62, in an interview on Tuesday reiterated that JPMorgan still plans to achieve 100 percent ownership of a Chinese brokerage operation, adding that the bank is in the “process” of doing so.

The bank is also planning to expand its equity research team covering Chinese companies by more than 50 percent this year, as it seeks to meet rising client demand for analysis.

The new hires, mostly senior analysts focusing on sectors from tech and consumer goods to financials and industrials, would help double the bank’s coverage of China-listed companies to more than 200, JPMorgan head of Asia ex-Japan equities research James Sullivan said.

“You’re seeing significant incremental interest from our institutional investors across all sectors,” Sullivan said.

About 80 percent of this year’s hiring has already been completed, and a further 30 to 40 percent increase next year is being considered, he added.

China renewed a pledge last month to open its financial markets and set a June deadline for allowing foreign firms to own as much as 51 percent of their securities joint ventures, up from the current 49 percent ceiling.

All ownership limits would be removed after three years, China has said.

UBS submitted an application on May 2, while Nomura filed its request earlier this week.

Both banks acted after China’s securities regulator encouraged them to quickly submit applications, people with knowledge of the matter have said.

JPMorgan decided more than a year ago to exit a minority-owned Chinese investment-banking joint venture, with Dimon highlighting that such setups tend to have corporate governance shortcomings. Morgan Stanley and Goldman Sachs Group Inc have also signaled a desire to control their China joint ventures.

Since then, China has pledged to allow foreign firms to own majority stakes in securities ventures, even as the country engages in a trade spat with the US.

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