Morgan Stanley Aims to Raise China Unit Stake to 51 Percent, CEO Says

Morgan Stanley Aims to Raise China Unit Stake to 51 Percent, CEO Says

Xu Yanyan

Date: Fri, 06/01/2018 - 15:39 / source:Yicai
Morgan Stanley Aims to Raise China Unit Stake to 51 Percent, CEO Says
Morgan Stanley Aims to Raise China Unit Stake to 51 Percent, CEO Says

(Yicai Global) June 1 -- US multinational investment bank Morgan Stanley aims to up its shareholding in its China unit to 51 percent from 49 percent at present, taking advantage of recent reforms in the country’s financial sector.

Chairman and chief executive James Gorman expressed confidence in China’s financial sector and capital market in light of the opening-up reforms in an interview with Yicai Global, adding that the firm ultimately wants to take full ownership of its local business in the long-run.

China Banking and Insurance Regulatory Commission regulator brought in measures last month to allow foreign firms greater control over their Chinese joint ventures in the country’s CNY253-trillion (USD40-trillion) financial sector. The change comes as part of President Xi Jinping’s pledge to “significantly broaden” market access in the world’s second-largest economy.

Foreign companies have been allowed to hold 51 percent of their China units since April 27. UBS was the first to make a move under the new rules, requesting permission to increase its 25-percent stake in UBS Securities to 51 percent within days of the change, while Japan’s Nomura Holdings and JP Morgan have since followed suit with applications to set up majority-owned securities units.

Gorman believes the reforms are an inevitable choice as China's economy continues to grow and Chinese enterprises grow bigger and stronger. Foreign-capital financial institutions only play a passive role in implementing strategies if they are small shareholders, he said, adding that they need a greater say in fund and resource allocation, liquidity management, and promoting business development.

China’s sustained rapid economic growth, political stability and continued opening-up of financial and capital market are key factors in attracting international financial institutions and investors, Gorman said. More overseas institutions are expected to set up shop in China thanks to the relaxation of restrictions.

Gorman indicated that it is more demanding for regulators to make decisions related to high-growth markets compared to slow-growth markets. Chinese regulators aim to establish a more fair, honest, and transparent market through monetary, fiscal, and overall economic policies, he added.

Editor: William Clegg

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Keywords: US, Morgan Stanley, James Gorman, investment bank