JPMorgan JPM continues with its plan of getting full ownership of China-based joint ventures (JVs). The recent addition to the list of JVs wherein the bank has full control is its futures JV, J.P.Morgan Futures Co., which has received a regulatory approval from the China Securities Regulatory Commission to increase its stake to 100% from 49%.
Currently, Shenzhen Wallace Rand Equity Investment Fund Management holds a 50% stake in the JV, while a local investment firm in Jiangsu owns the remaining 1%.
Thus, JPMorgan will operate the first fully foreign-owned futures business in China. The bank had applied for 100% stake earlier this year. The limits on foreign ownership of the futures business got scrapped on Jan 1, as part of China’s efforts to gradually open up the financial sector to overseas players.
The recent development comes on the heels of the approval of increasing the company’s stake in other financial servicing operations including securities, asset management and mutual funds businesses in the country. In December 2019, when JPMorgan received a nod to set up majority-owned securities JV in China, the company’s CEO Jamie Dimon had said, “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.”
With China opening up financial markets, the biggest U.S. bank (in terms of total assets) intends to get full ownership of all mainland China operations by next year. This is part of JPMorgan’s four-year investment plan in the country, which was announced last year.
Shares of this Zacks Rank #3 (Hold) company have rallied 18.5% over the past three months, underperforming the industry’s rise of 23.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In addition to JPMorgan, several major global financial firms like Goldman Sachs GS, Nomura Holdings, Morgan Stanley MS, BlackRock BLK and UBS Group have won approval or are waiting for the same to increase stakes in their respective JVs in China. Since foreign companies are allowed to conduct business in the country without any restrictions, it will aid in geographical expansion and boost revenues.
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