DBS Group Sets Up Joint-Venture Brokerage
Singaporean financial services corporation DBS Group has been approved by China's top securities watchdog to set up a majority-owned joint venture, DBS Securities (China), which will engage in brokerage and securities investment consulting, securities underwriting, sponsorship and propriety trading, China Securities Journal reported.
DBS Securities will be the eighth brokerage that is majority owned by foreign players, since the country announced the lifting of the cap on foreign investment in JV brokers and fund managers to 51 percent in 2018.
With an investment of $112.1 million, DBS Group will control a 51 percent stake of the Shanghai-based JV, which will provide onshore products and services for both domestic and international customers, according to a statement released by the bank.
The other four Chinese owners, who hold the remaining 49 percent, are controlled by the Shanghai Municipal State-owned Assets Supervision and Administration Commission. The total registered capital of DBS Securities (China) is reportedly 1.5 billion yuan ($219.7 million).
In January, the China Securities Regulatory Commission said foreign banks could apply to own their onshore securities businesses outright from April 1, as part of a trade deal with the U.S.
Aside from DBS Securities, the other seven majority foreign-controlled brokers in China are UBS Securities, J.P. Morgan Securities China, Nomura Orient International Securities, Goldman Sachs Gao Hua Securities, Morgan Stanley Huaxin Securities and Daiwa Securities China.
Shanghai Firm Sells Stake In J.P. Morgan Securities China
Real-estate development company Shanghai Waigaoqiao Free Trade Zone Group plans to sell its 20 percent stake in the joint venture of J.P. Morgan Securities China for nearly 178 million yuan ($26.04 million), according to a statement posted Wednesday evening by Shanghai United Assets and Equity Exchange.
The registered capital in the joint venture totals 800 million yuan, according to public statistics. J.P. Morgan Chase International Financing Limited, which is a subsidiary of JP Morgan Chase, holds a 51 percent stake of the joint venture, with a contribution of 408 million yuan.
Shanghai Waigaoqiao Group, with an investment of 160 million yuan for a 20 percent share, is the second-biggest shareholder. The remaining 29 percent is held by another four investment and fund management companies in Shenzhen, Beijing, Xinjiang and Shanghai.
Aside from providing construction and operations services, Shanghai Waigaoqiao Free Trade Zone Group also operates an import and export agency business. It reported 379 million yuan in profits in the first half, a decline of 44.77 percent year-on-year.
As of Thursday, the other shareholders, except for J.P. Morgan International Finance Limited, have stated that they would forgo the right of first refusal to buy the 20 percent. This means J.P. Morgan will likely increase its investment stake in the joint venture.
JPMorgan Faces $1 Billion Price-tag To Buy Out JV Partner
Shanghai International Trust Co., a subsidiary of state-owned financial holding firm Shanghai International Group, has announced its agreement to sell its 49 percent stake in China International Fund Management Co. (CIFM) to JPMorgan.
This came after JPMorgan Chase's asset management business announced this April its intention to buy 100 percent of the shares in CIFM.
The joint venture partnership of CIFM has been JPMorgan's beachhead into the $45 trillion China financial market over the past 15 years.
In an environment where Beijing has been opening up the mutual fund industry to foreign-owned entities, it is a rare and attractive proposition to own a Chinese fund house. However, analysts are balking at the cost, projected at over $1 billion, which comes in well above market valuation. Fund consultancy Z-Ben Advisors said that pegged the deal at 50 times earnings, and represented a 52 percent premium over fair value, Reuters reported. JPMorgan was unavailable for comment.
JPMorgan, last year agreed to pay at least 241.3 million yuan ($35.30 million) to Shanghai Trust for a 2 percent stake increase to hold, in total, 51 percent of CIFM.
Competitors like Goldman Sachs Group Inc. and UBS Group have been hiring on staff and increasing their investments to tap into Chinese households' estimated $13 trillion in investable assets. The country's growing affluent class is projected to invest assets overseen by retail public funds of $3.4 trillion by 2023, according to Deloitte LLP.
Chemical Mega-Merger On The Way
Sinochem Group and China National Chemical Corporation (ChemChina), two top state-owned chemical makers, confirmed plans to merge, which would create by far the world's largest chemical producer, China News Service reported.
Ning Gaoning, the chairman of the board of the two companies announced the consolidation during a State Council news conference and said the merger is "highly necessary" to collaborate on upstream and downstream technology and in both domestic and overseas markets.
The two giants had combined revenue of $146.6 billion in 2019. It has long been rumored that the merger was in the cards. In January, the two companies consolidated their agricultural assets into ChemChina subsidiary, Syngenta Group.
Due to the novel coronavirus pandemic, however, Sinochem's net profit in the first half of the year plunged to roughly half compared with the same period last year, while ChemChina reported that its 2019 sales underperformed, without disclosing earnings, Nikkei Asian Review reported.
Both Sinochem and ChemChina are on a U.S. Department of Defense list of Chinese enterprises that are owned or controlled by the Chinese military and operate directly or indirectly in the U.S.
Guangzhou Calls For Further Investment in GBA
Guangzhou is rolling out measures to promote the financial development of the Guangdong-Hong Kong-Macau Greater Bay Area (GBA), Guangzhou Daily reported.
A guideline document that includes a total of 66 measures was issued by the Guangzhou government on Wednesday. It aims to enlarge cross-boarder trading in the GBA while bringing greater convenience to investment and financing.
This move follows an earlier call in May by the central government to promote finance development in the GBA, focusing on innovative reform in the financial sector with the continued collaboration between the mainland and Hong Kong and Macau SARs, according to a statement released by Guangzhou government.
The Guangzhou government is urging international commercial banks to set up operations in the Guangdong pilot free trade zone, and is also encouraging local banks in Guangzhou to issue cross-border loans.
Porsche Macan Clone Files For Bankruptcy
Zotye Auto, a company whose SR9 SUV was controversially criticized for being a clone of the Porsche Macan, announced on Tuesday evening that its parent company, Zhejiang-based Tech-New Group, has been approved for a petition for bankruptcy and restructuring.
The court in Yongkang city in Zhejiang province verified that Tech-New Group is insolvent and unable to clear current liabilities. But considering the group's assets are spread out in various sectors and have "core values," the court said it would allow it to seek the resumption of operations after a reorganization, said Zotye Auto's statement.
Tech-New Group manufactures automobiles and new energy vehicles. It also produces automotive parts including automotive engines, gearboxes, batteries, motors and chassis. It holds a 38.78 percent stake in Zotye Auto.
Zotye Auto sold 1,417 autos in the first half of the year, a drastic drop from its peak sales of 330,000 autos in 2016. Zotye Auto's plants have reportedly suspended operations.
