China is again reluctantly opening the door to foreign investment banks, encouraging them to set up local broking joint ventures capable of underwriting debt and equity offerings, and possibly a range of other services including wealth management, private banking, and institutional broking. China’s stock regulator, the CSRC, is expected to issue new rules on the sector in the next few weeks. So far, Citi, Credit Suisse and Morgan Stanley are ahead in the race to secure a Chinese partner.
Morgan Stanley, which already had a joint venture with CICC, has signed a memorandum of understanding with Fortune Securities, a brokerage that is majority controlled by the Shanghai city council. Both Citi and Credit Suisse are battling it out to secure an alliance with Founder Securities, a brokerage based in eastern Hangzhou and 80% controlled by the Beijing-based Founder Group conglomerate. Each is trying to gain control of any new venture, following successful forays into the booming mainland capital markets by Goldman Sachs and UBS.