Foreign involvement in China’s financial markets received a boost in December as Beijing increased the amount overseas players can invest in Chinese stocks and also lifted the ban on Sino-foreign securities joint ventures.
First, the government said it would increase the Qualified Foreign Institutional Investor (QFII) quota to US$30 billion from US$10 billion. This was swiftly followed by news that Beijing would start accepting applications for securities industry joint ventures for the first time in two years.
Foreign stakes in such ventures are capped at 33% although the US wants this increased to 49%.
As it stands, only two foreign banks play an active role in China’s securities sector, Goldman Sachs and UBS. However, it appears that this number could soon double as Credit Suisse and Morgan Stanley announced they had signed investment banking joint ventures with Founder Group and China Fortune respectively.
Analysts noted that final approval for the deals would only come after long consideration by Beijing.