American investment banks Goldman Sachs and Morgan Stanley have secured the clearance of the China Securities Regulatory Commission for taking majority stake in their China securities joint ventures (JVs).
The approval signals the continuation of China’s financial sector liberalisation even as it grapples with disruptions caused by the Covid-19 pandemic.
With the approval, Goldman Sachs will be able to increase its holding in its China JV Goldman Sachs Gao Hua Securities from 33% to 51%.
The bank formed the China JV in 2004.
Goldman Sachs APAC ex-Japan co-president Todd Leland said: “This is a significant milestone in the evolution of our business in China.
“We will be seeking to move towards 100 percent ownership at the earliest opportunity.”
Similarly, Morgan Stanley can now raise its holding in Morgan Stanley Huaxin Securities from 49% to 51%.
The JV was launched in 2011. It offers underwriting and sponsorship of equities and bonds.
Morgan Stanley set up its mainland China presence in 1994.
It has offices in Beijing, Shanghai, Hangzhou, Shenzhen, Zhuhai, along with a regional office in Hong Kong.
Morgan Stanley Asia-Pacific co-CEO and CEO China Wei Sun Christianson said: “China is a core strategic focus for the Firm and a market in which we and many of our clients see significant opportunities.
“We are proud of our long history and track record in China and look forward to further investment in Morgan Stanley Huaxin Securities to provide the best advice and services to clients.”
The move to open up the financial sector to foreign players is China’s plan to increase competition.
In 2018, UBS became the first foreign entity to gain approval to hold a majority stake in its China securities JV under the new rules.
Last year, JPMorgan received the approval to open its majority-owned securities JV in China.