China is "steadily widening the opening up" of its financial industry. Companies globally see great opportunity for business growth. Chinese President Xi Jinping announced last week that the country steadily opens its financial industry to global investments. The presidents announced that the opening is on track despite China's on-going trade war with the United States. The president promised that the policymakers will move deliberately in dealing with its financial industry.
Investors are now considering the promised security that China's financial industry offers. A year ago, the country announced that it will ease local ownership rules and loosen entry barriers to its financial industry. The country now has a $45 trillion industry.
The announcement last year allowed foreign investors to hold majority stakes in China's local securities firms, mutual fund managers, band and insurers.
Bloomberg Economics projected that firms offering Life Insurer's Premiums will increase gain by 12 percent in 2030 with an estimated value of $217 billion. Fund Assets under Management will increase by 6 percent with an estimated value of around $1.8 trillion in the same year. The securities industry is expected to gain at least 4 percent to an estimated 2030 profit of $3.3 billion. Banking will also increase by 4 percent at $29 billion estimated profit.
Firms, however, are cautious in their investments. They applaud China's opening but they are considering the country's growing number of short-term challenges that include the trade war, sinking stock prices, and rising defaults.
According to Mark Austen, the chief executive officer of the Asia Securities Industry & Financial Markets Association, the firms are taking a wait-and-see attitude to see whether they will be able to compete on a level playing field in China.
Currently, the securities industry is the most active. It was reported that the UBS Group AG, JPMorgan Chase & Co., and Nomura Holdings Inc. have pending applications to hold majority stakes in their Chinese joint ventures. Morgan Stanley and Credit Suisse Group AG are also expected to apply. There was no report that a foreign-controlled business was approved, however, everyone believes that the first approval could come soon.
Currently, the country's equity and debt markets rank third. China's equity is at $5.6 trillion and its debt market is estimated at $11 trillion. Global securities firms see great opportunities for brokerage, advisory, and underwriting fees as policymakers move to reduce the country's reliance on bank lending.
