CFIC Introduction
In recent years, the mainland has made great efforts to promote high-level financial opening-up, with a number of newly established foreign-funded securities firms, public offerings, and asset management institutions landing one after another, existing institutions continuing to increase capital or issuing new products, and the net purchase of northbound funds during the year also exceeded 60 billion yuan, releasing a positive signal of optimism and investment in China.
Original title: Optimistic about the development prospects, foreign-funded institutions have increased their layout in the Chinese market
A few days ago, the foreign-funded brokerage FABA Securities was approved by the regulator to set up, and the number of foreign-controlled securities firms in the mainland has increased to 10. In recent years, the mainland has made great efforts to promote high-level financial opening-up, with a number of newly established foreign-funded securities firms, public offerings, and asset management institutions landing one after another, existing institutions continuing to increase capital or issuing new products, and the net purchase of northbound funds during the year also exceeded 60 billion yuan, releasing a positive signal of optimism and investment in China.
BNP Paribas Securities was approved to set up a foreign-funded securities firm to accelerate its layout in China
The reporter of the "Economic Information Daily" learned that a few days ago, the China Securities Regulatory Commission approved the establishment of BNP Paribas Securities (China) Co., Ltd. BNP Paribas Securities is registered in Shanghai, with a registered capital of 1.1 billion yuan (RMB, the same below), 100% funded by BNP Paribas, and its business scope is securities brokerage, securities proprietary trading, securities investment consulting, and securities asset management.
It is worth noting that this is also another financial layout of BNP Paribas in the Chinese market after BNP Paribas Wealth Management and Nanyin BNP Paribas Consumer Finance Company. Previously, in May 2015, Nanyin BNP Paribas Consumer Finance Co., Ltd. was established with a registered capital of 5 billion yuan, which is jointly controlled by Bank of Nanjing and BNP Paribas.
In June 2023, BNP Farm Bank Wealth Management was inaugurated in Shanghai, becoming the fifth joint venture wealth management company in mainland China. BNP Paribas Wealth Management is a Sino-foreign joint venture wealth management company jointly established by ABC Wealth Management, a wholly-owned subsidiary of Agricultural Bank of China, and BNP Paribas Asset Management Holding Company (hereinafter referred to as "BNP Paribas Asset Management"), with a registered capital of 1 billion yuan. Among them, ABC Wealth Management contributed 49% and BNP Paribas Asset Management contributed 51%.
At present, the number of foreign-controlled securities firms in mainland China has increased to 10. Among them, Standard Chartered Securities, Goldman Sachs (China) and JPMorgan Chase (China) are wholly foreign-owned, and the remaining seven are Sino-foreign joint ventures. At the same time, the "circle of friends" of foreign-controlled securities institutions is still expanding. Since 2024, a number of foreign-funded institutions have either applied to set up new securities firms in China, officially announced their business development, or sought to broaden the boundaries of their existing business in China.
On March 22, Standard Chartered Securities (China) Co., Ltd. ("Standard Chartered Securities"), the first wholly foreign-owned securities firm approved for new establishment, announced the official opening of business. "In a turbulent world environment, we are optimistic about China's economic prospects for a long time, and our confidence has never wavered. Standard Chartered Securities said on the occasion of its official opening.
On February 9, the China Securities Regulatory Commission (CSRC) provided feedback on the application documents of Citigroup Global Financial Holdings Co., Ltd. to set up a wholly-owned brokerage, Citigroup Securities (China) Co., Ltd., covering six items, including financial status, credit rating and outlook, as well as updating the international rankings of securities brokerage, securities investment consulting, securities underwriting and sponsorship business in the past three years.
On March 1, HSBC Qianhai Securities Co., Ltd. received feedback from the China Securities Regulatory Commission (CSRC) on its qualifications for margin financing and securities lending, and the CSRC requested it to provide additional information on its 2023 operating results and QDIE (Qualified Domestic Investment Enterprise) products. On the same day, Morgan Stanley Securities (China) Co., Ltd. was approved to change its business scope to include securities investment consulting business, changing "proprietary trading of bonds (including government bonds and corporate bonds)" to "proprietary trading of securities".
Foreign-funded institutions frequently settle for northbound funds to continue to buy
In fact, in the context of the mainland's efforts to promote high-level financial opening-up, in addition to foreign-funded securities firms, there have been a number of foreign-funded public offerings to increase capital or issue new products, and a number of foreign-funded asset managers have completed filing and registration, and foreign-funded financial institutions are accelerating the "beach" of the Chinese market, releasing a positive signal of optimism and investment in China.
On April 10, Schroder China Dynamics, a wholly foreign-owned public offering of Schroder Fund, was officially offered to the public. This is the second public offering product issued by Schroders Fund since its official launch, and it is also the first equity product. On the same day, another wholly foreign-owned public offering of Fidelity Fund's equity new product, Fidelity Joy Dividend Preferred Mix, also ushered in its debut. In addition, in April, a new wholly foreign-owned public offering of AllianceBernstein Fund was officially established, with an initial offering scale of about 500 million yuan and a total of 4,494 valid subscriptions.
According to public information, since the beginning of this year, BlackRock Fund, Luberger Berman Fund, Fidelity Fund, Schroder Fund and other institutions have reported a total of more than 6 funds, mainly bond funds.
Previously, many foreign public offerings announced capital increases to "replenish blood". According to the national enterprise credit information publicity system, the registered capital of the fund increased from 300 million yuan to 420 million yuan, a capital increase of 40%, which is also the third capital increase since the establishment of the fund. In the second half of last year, the registered capital of BlackRock Fund increased from 700 million yuan to 1 billion yuan. In February this year, Fidelity Fund increased its registered capital to $160 million from the previous $130 million, an increase of more than 23%.
A number of international asset management giants have also landed in China this year. Since the beginning of this year, three international asset management giants, including Hanling Capital, Brookfield and KKR, have landed in Shanghai. According to public information, on March 18, Hanling (Shanghai) Private Equity Fund Management Co., Ltd., a subsidiary of Hanling Capital, completed the filing of the AMAC, and on March 8, the private equity funds of Brookfield and KKR also completed the filing and registration.
In addition to the layout of institutions, the continuous purchase of northbound funds has also become another positive signal for the layout of foreign investment institutions. Wind data shows that as of April 15, northbound funds have bought more than 60 billion yuan since 2024, exceeding the 43.704 billion yuan in the whole of last year.
Institutions are optimistic about the stability and improvement of A-shares
A number of foreign institutions have recently made judgments on the investment strategy of the A-share market in the second quarter. Many institutions said that with the steady recovery of the macro economy, A-shares are expected to stabilize and continue to rebound in the second quarter.
Nomura Orient International Securities said that A-shares are expected to stabilize and continue to rebound in the second quarter, mainly because high-frequency data has increased the probability of economic stabilization, providing an opportunity for valuation repair for most industries. For capital markets, stronger-than-expected high-frequency economic data provides marginal support to the market. The gradual formation of economic stabilization expectations will become the most important marginal change in A-shares in the second quarter.
Meng Lei, a China equity strategy analyst at UBS Securities, also believes that a new round of rebound may be brewing. At the beginning of the new year, the trend of the A-share market was weaker than expected. As government departments have spoken out intensively to demonstrate their determination to safeguard the capital market, market liquidity risks have been alleviated, and investor sentiment has stabilized and rebounded. In his view, the upward revision of earnings expectations and favorable policies on the high-quality development of the capital market will promote the A-share market to gain a new round of momentum in the second quarter.
Goldman Sachs said in a recent report that it expects a potential upside of 12% and 8% for A-shares and H-shares in the next 12 months. Bullish on consumer technology/internet stocks due to a more favourable revenue growth environment and relatively good capex/cost control. Keep an eye on shareholder returns, as both dividends and share buybacks are at all-time highs in 2023.
Morgan Stanley Fund also believes that starting in the second quarter, it is expected that China's PPI (National Industrial Producer Price Index) and other indices will begin to rise, and the earnings of listed companies will improve significantly.
In terms of specific industries, Nomura Orient International Securities believes that in the second quarter, consumer and pharmaceutical blue chips will benefit more from the rebalancing of market styles, especially in the food and beverage, pharmaceutical and biological, beauty care and home appliance sectors. The regulator has recently increased the assessment of dividend ratios and other indicators, and the A-share industry has the ability to improve ROE (return on equity) through multiple dividends, which can be paid attention to. In addition, new quality productivity will become the key to maintaining a medium-high growth rate of China's economy in the transition period, and it is recommended to pay long-term attention to the performance opportunities in the fields of new energy going overseas, advanced process production capacity, aerospace, high-tech infrastructure, and biomedicine.
Source of this article: Economic Information Daily
Reporter: Luo Yishu
WeChat editor: Liu Sile
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