More foreign stake in Chinese brokerages
Beijing to raise investment cap in joint-venture securities firms from 33 per cent to 49 per cent
Beijing is set to increase the investment cap for foreign investors setting up joint-venture brokerages on the mainland, the securities regulator announced yesterday as the stock market hit a 42-month low.
The China Securities Regulatory Commission (CSRC) published a draft rule yesterday evening under which a foreign partner could own up to 49 per cent of a Sino-foreign joint-venture securities firm, up from the current 33 per cent.
The regulator said it was soliciting public opinions before officially implementing the rule.
The increased maximum foreign ownership in a joint-venture brokerage is in line with an agreement between top Chinese and American policymakers during the Strategic and Economic Dialogue in May, the CSRC said.
Beijing has been reluctant to fully open the lucrative securities sector in the past decade for fears that homegrown brokerages are not strong enough to compete with big-name global rivals such as Morgan Stanley and Goldman Sachs.
Mainland securities firms, including Citic Securities and Haitong Securities, grew by leaps and bounds before 2010, benefiting from the rapid growth of the market and taking advantage of huge trading volumes and a flood of initial public offerings to pocket handsome profits.
Currently, foreign investors cannot open wholly owned securities firms on the mainland and can only establish joint-venture brokerages.