(China Alert) Brokerage: Stick or twist
-We believe majority ownership of brokerages is already within sight for several foreign firms
-Stakeholder politics may be a tough hurdle to clear
-Positioning among foreign rivals may be even tougher
Update: Ownership reform in China is taking place across many financial sectors. Now it’s the brokerage’s turn. Parallel to this reform, we are seeing regulators make an active effort to clean up the industry, specifically hitting underwriting (the bread and butter of JVs). This includes current business practices as well as what may have been done in the past. Z-Ben Advisors believes that before foreign firms press ahead with gaining greater brokerage control in China, there are two considerations. They should not only look into their existing position (for both those here and those not yet here) but also look ahead to new business opportunities in the medium term and how these may boost or hamper existing global operations. This goes well beyond Greater China.
Z-Ben Advisors expects that the first foreign majority-owned JV brokerage firm will …
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