China paves way for brokers’ expansion

SHANGHAI: China's top stock watchdog said yesterday it will support domestic brokerages that find strategic partners and go public, as the sector returns to profitability more than two years after an overhaul of the troubled industry. 

Beijing has so far only allowed foreign participation in its battered brokerage sector on a piecemeal basis, with each deal structured differently, to the frustration of global financial giants eager to tap China's US$2 trillion of personal savings. 

“Support will be given to qualified securities companies to raise funds through initial public offerings and private placements, and to supplement their capital by introducing strategic investors,” state media quoted China Securities Regulatory Commission chairman Shang Fulin as saying. 

Shang did not identify any potential investors. 

Foreigners are now restricted to a single 20% stake in an existing domestic broker or a 33% stake in new joint ventures. Foreign players such as JPMorgan are lobbying Beijing to lift the limits. 

Last September, Switzerland's UBS AG unveiled plans to invest 1.7 billion yuan (US$212mil) for 20% of Beijing Securities, becoming the first foreign company to buy into a Chinese brokerage and winning de facto management control. – Reuters  

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