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JPMorgan Increases Stake in China Securities Venture to 71%
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JPMorgan Chase & Co. (JPM - Free Report) has raised its stake in its Chinese securities joint venture (JV). According to a Shanghai United Assets and Equity Exchange filing, the bank now owns 71% stake in the JV. This comes after the company completed the transaction to buy a 20% stake in the JV from one of the local partners — Shanghai Waigaoqiao FTZ — for 177.7 million yuan ($26 million) on Oct 23.
Notably, other existing shareholders have given up their rights to add to the holdings. Also, they have agreed to not transfer and/or divest their holdings without consent from JPMorgan.
The transaction’s completion will take the bank a step closer to gain full ownership of a securities firm in China. The JV comprises investment banking, research, equities and fixed income operations.
The transaction makes JPMorgan the only foreign bank with the highest ownership stake in a mainland Chinese securities JV. Further, Reuters reported in May that the bank plans to hire at least 12 equity research analysts in China this year.
Last December, JPMorgan received the regulatory approval to set up a majority-owned securities JV in the country. The company’s CEO Jamie Dimon had noted, “We will continue to invest in and fully support our business in the country, which has become a critical market for many of our domestic and global clients.”
Earlier this August, JPMorgan was planning to pay a minimum of 7 billion yuan ($1 billion) for owning a 100% stake in its China mutual fund JV — China International Fund Management Co. In June, it received a nod to increase the stake from 49% to 100% in the China-based futures JV — J.P.Morgan Futures Co.
With China opening up its financial markets to foreign firms faster than expected with the removal of restrictions on ownership, the bank has decided to take full ownership of all mainland China operations by next year. This is part of JPMorgan’s four-year investment plan in the country.
In addition to JPMorgan, various global finance companies are seeking to expand operations in China. Many of the firms have already started taking advantage of the available options therein. Remarkably, in September, Citigroup (C - Free Report) became the first U.S. bank to get a domestic fund custody licence from China-based regulators. Several other firms like Goldman Sachs (GS - Free Report) , BlackRock, Nomura Holdings, Morgan Stanley (MS - Free Report) and UBS Group have either won approval or are waiting for the same to increase stakes in their respective JVs in the country.
Shares of JPMorgan have lost 29.7% so far this year compared with the industry's 37% decline.
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
JPMorgan Increases Stake in China Securities Venture to 71%
JPMorgan Chase & Co. (JPM - Free Report) has raised its stake in its Chinese securities joint venture (JV). According to a Shanghai United Assets and Equity Exchange filing, the bank now owns 71% stake in the JV. This comes after the company completed the transaction to buy a 20% stake in the JV from one of the local partners — Shanghai Waigaoqiao FTZ — for 177.7 million yuan ($26 million) on Oct 23.
Notably, other existing shareholders have given up their rights to add to the holdings. Also, they have agreed to not transfer and/or divest their holdings without consent from JPMorgan.
The transaction’s completion will take the bank a step closer to gain full ownership of a securities firm in China. The JV comprises investment banking, research, equities and fixed income operations.
The transaction makes JPMorgan the only foreign bank with the highest ownership stake in a mainland Chinese securities JV. Further, Reuters reported in May that the bank plans to hire at least 12 equity research analysts in China this year.
Last December, JPMorgan received the regulatory approval to set up a majority-owned securities JV in the country. The company’s CEO Jamie Dimon had noted, “We will continue to invest in and fully support our business in the country, which has become a critical market for many of our domestic and global clients.”
Earlier this August, JPMorgan was planning to pay a minimum of 7 billion yuan ($1 billion) for owning a 100% stake in its China mutual fund JV — China International Fund Management Co. In June, it received a nod to increase the stake from 49% to 100% in the China-based futures JV — J.P.Morgan Futures Co.
With China opening up its financial markets to foreign firms faster than expected with the removal of restrictions on ownership, the bank has decided to take full ownership of all mainland China operations by next year. This is part of JPMorgan’s four-year investment plan in the country.
In addition to JPMorgan, various global finance companies are seeking to expand operations in China. Many of the firms have already started taking advantage of the available options therein. Remarkably, in September, Citigroup (C - Free Report) became the first U.S. bank to get a domestic fund custody licence from China-based regulators. Several other firms like Goldman Sachs (GS - Free Report) , BlackRock, Nomura Holdings, Morgan Stanley (MS - Free Report) and UBS Group have either won approval or are waiting for the same to increase stakes in their respective JVs in the country.
Shares of JPMorgan have lost 29.7% so far this year compared with the industry's 37% decline.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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