China's commitment to further open up its securities industry may benefit
both international companies and the country's capital market, analysts and top
international managers said yesterday.
Vice-Premier Wu Yi and US Treasury Secretary Henry Paulson agreed to a series
of opening up measures during the China-US Strategic Economic Dialogue, held in
China has agreed to resume allowing overseas market players to set up joint
venture securities firms. It will also allow international firms to expand from
investment banking to brokerage, principal investment and asset management
businesses later this year.
"Opening up the securities industry will prompt more major players to get
involved, besides UBS and Goldman Sachs," Cheng Weiqing, an analyst with CITIC
Morgan Stanley and Merrill Lynch, the No 2 and No 3 American securities firms
by market value, may be among the primary beneficiaries of the new policy.
"We welcome the further opening of China's financial
sector," said Hans Schuettler, CEO
of Morgan Stanley Asia.
"This reflects the government's commitment to develop a more efficient and
stronger domestic capital market. We also believe having foreign participants in
the domestic market will help raise standards and build a world-class securities
industry for the country," he said.
China had banned international companies from investing in local securities
firms since September, out of concern that it would threaten local brokerages as
they recover from a four-year slump. Before the ban, UBS and Goldman Sachs Group
Inc were the only foreign firms with brokerages in the country.
A high-ranking official from the UBS Asia office said yesterday that the
agreement means brokerages can form securities firms in China.
"It is a good move for China's market. But we need more details," the unnamed
Analysts said that due to lack of details, it is hard to tell how far China
will open up the industry.
"I think China may first allow more foreign joint-venture firms to expand
their business scope. In the near term, international securities firms may not
be allowed to do such businesses alone on the mainland," said She Minhua, a
financial analyst with CITIC China Securities.
He said that the opening up should be a step-by-step process because the
entry of international securities firms may have a heavy impact on local
"The impact will be much bigger than the opening of the commercial bank
sector, as China's securities firms have long been small and sluggish," he said.
But CITIC's Cheng disagreed, saying that it is possible China may speed up
(China Daily 05/25/2007 page14)