China will soon resume accepting applications for Sino-foreign securities joint ventures, a leading regulator said yesterday.
"We have always welcomed and encouraged the establishment of Sino-foreign joint-venture securities firms," Tu Guangshao, vice-chairman of the China Securities Regulatory Commission (CSRC), said on the sidelines of the 17th National Congress of the CPC.
However, the approval of such institutions was suspended last year due to the restructuring of local securities houses, Tu said, adding that the reshuffle had been basically completed.
The CSRC will gradually expand the business scope of these firms, but Tu did not offer a timetable.
Currently, joint ventures are allowed to engage only in underwriting and are barred from brokerage and asset management businesses.
Goldman Sachs and UBS were the early birds in the Chinese market.
Goldman Sachs holds a 33-percent stake in Goldman Sachs Gaohua Securities, while UBS last year managed to establish UBS Securities with Beijing Securities prior to the one-year moratorium.
An evaluation of the operations of the UBS Securities and Goldman Sachs Gaohua will be carried out, Tu said, while expressing his hope the two could be successful not only in the short term, but also in the long run.
Tu said his agency is working on the rules for foreign investment in the securities industry, but declined to reveal whether they will be released before the end of the year.
In his report, President Hu Jintao called for everyone to stick to the opening-up policy and the securities industry should also follow this path, Tu said.
During a meeting in May with US Treasury Secretary Henry Paulson, Vice-Premier Wu Yi pledged to open the Chinese securities industry to overseas firms to comply with World Trade Organization rules.
Foreign investment banks are eager to make inroads into China, whose stock market is on a remarkable bull run.
Stock investment accounts have reached 128 million and market capitalization is now 28.58 trillion yuan ($3.8 trillion), giving Chinese brokerages their biggest profits in a decade.
Granting entry to overseas investment banks is only part of the opening up of the financial market.
"The country should in a gradual manner allow Chinese citizens to invest in overseas markets, which is a general trend," he said.
That will help alleviate the pressure brought about by excessive liquidity and expand people's investment channels, he said. However, overseas investment is a complex issue and more studies are needed, including how to protect investors.
On individuals' direct investment in the Hong Kong stock market, Tu said preparations were under way and will be launched when ready.
The State Administration of Foreign Exchange said in August that individuals will be allowed to buy stocks in Hong Kong through Bank of China branches in Tianjin Municipality in a pilot scheme.
(China Daily October 18, 2007)
