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Morgan Stanley (MS) to Boost Ownership in China Securities JV
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Morgan Stanley (MS - Free Report) is a step closer to attaining almost full ownership of its Chinese securities joint venture (JV), Morgan Stanley Securities China Co Ltd. The company is set to increase its stake in the JV to 94% after its partner – China Fortune Securities Co. Ltd – put 4.06% interest for sale.
Per the filling by China Fortune, Morgan Stanley will pay 698 million yuan ($110 million) for the stake in the JV, which was formed in January 2011. Also, the China Securities Regulatory Commission (“CSRC”) and other government authorities need to approve the changes in ownership structure.
If approved, the changes will dilute China Fortune’s ownership to 5.04%.
It must be noted that this July, Morgan Stanley acquired an additional 39% interest in the JV (earlier known as Morgan Stanley Huaxin Securities) for 569.6 million yuan ($89.5 million) and renamed the unit to its present name. This had increased the company’s total stake in the JV to the current 90%.
Further, earlier in March 2020, Morgan Stanley received approval for raising its stake in the securities JV to 51% from 49%. At that time, Wei Sun Christianson, Asia-Pacific Co-CEO and CEO China, Morgan Stanley, had said, “China is a core strategic focus for the Firm and a market in which we and many of our clients see significant opportunities.”
Our Take
Given that China’s $53-trillion financial market is now open to foreign firms, following the removal of ownership restrictions in 2018, several global banks have been rushing to capitalize on the lucrative prospect. The country has become the second-largest equity market globally, and is one of the broadest and deepest growth markets outside the United States.
This led several firms like Morgan Stanley, JPMorgan (JPM - Free Report) and Goldman Sachs (GS - Free Report) to expand their operations in China. At present, eight global banks, including JPMorgan and Goldman, that either have approval for 100% ownership of their local securities venture or obtained a majority stake in their JVs.
JPMorgan and Goldman had received approvals to own 100% of their onshore securities JVs this August and October, respectively. Additionally, along with Morgan Stanley, both GS and JPM have plans to expand further in the country to diversify revenues and also expand their global footprint and market share.
Morgan Stanley has a presence in China since 1994. With offices in Beijing, Shanghai, Hangzhou, Shenzhen and Zhuhai, and a regional office in Hong Kong, the company offers a wide array of services to domestic and international clients, including financing, restructuring, M&A advisory, research, fixed income and foreign exchange.
Shares of Morgan Stanley have jumped 44% over the past year, outperforming the industry’s rise of 36.4%.
Image: Bigstock
Morgan Stanley (MS) to Boost Ownership in China Securities JV
Morgan Stanley (MS - Free Report) is a step closer to attaining almost full ownership of its Chinese securities joint venture (JV), Morgan Stanley Securities China Co Ltd. The company is set to increase its stake in the JV to 94% after its partner – China Fortune Securities Co. Ltd – put 4.06% interest for sale.
Per the filling by China Fortune, Morgan Stanley will pay 698 million yuan ($110 million) for the stake in the JV, which was formed in January 2011. Also, the China Securities Regulatory Commission (“CSRC”) and other government authorities need to approve the changes in ownership structure.
If approved, the changes will dilute China Fortune’s ownership to 5.04%.
It must be noted that this July, Morgan Stanley acquired an additional 39% interest in the JV (earlier known as Morgan Stanley Huaxin Securities) for 569.6 million yuan ($89.5 million) and renamed the unit to its present name. This had increased the company’s total stake in the JV to the current 90%.
Further, earlier in March 2020, Morgan Stanley received approval for raising its stake in the securities JV to 51% from 49%. At that time, Wei Sun Christianson, Asia-Pacific Co-CEO and CEO China, Morgan Stanley, had said, “China is a core strategic focus for the Firm and a market in which we and many of our clients see significant opportunities.”
Our Take
Given that China’s $53-trillion financial market is now open to foreign firms, following the removal of ownership restrictions in 2018, several global banks have been rushing to capitalize on the lucrative prospect. The country has become the second-largest equity market globally, and is one of the broadest and deepest growth markets outside the United States.
This led several firms like Morgan Stanley, JPMorgan (JPM - Free Report) and Goldman Sachs (GS - Free Report) to expand their operations in China. At present, eight global banks, including JPMorgan and Goldman, that either have approval for 100% ownership of their local securities venture or obtained a majority stake in their JVs.
JPMorgan and Goldman had received approvals to own 100% of their onshore securities JVs this August and October, respectively. Additionally, along with Morgan Stanley, both GS and JPM have plans to expand further in the country to diversify revenues and also expand their global footprint and market share.
Morgan Stanley has a presence in China since 1994. With offices in Beijing, Shanghai, Hangzhou, Shenzhen and Zhuhai, and a regional office in Hong Kong, the company offers a wide array of services to domestic and international clients, including financing, restructuring, M&A advisory, research, fixed income and foreign exchange.
Shares of Morgan Stanley have jumped 44% over the past year, outperforming the industry’s rise of 36.4%.
Currently, Morgan Stanley carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.