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 Washington.
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 securities, said.
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 official said.
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 securities firms.
"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 the measures.
(China Daily May 25, 2007)