IFR Asia - 24.08.2019

Goldman to raise stake in China JV

GOLDMAN SACHS has applied to raise its

stake in its China securities joint venture,

Goldman Sachs Gao Hua, to 51%.

China’s securities regulator received

Goldman’s application last Monday,

according to a statement on the China

Securities Regulatory Commission’s

website. The US investment bank currently

holds a 33% stake with Beijing Gao Hua

Securities owning the remaining 67%.

'OLDMANûHASûBENElTEDûHISTORICALLYûFROMû

being one of only two foreign banks to have

management control of its JV (UBS is the

other). It also has more licences than any

other JV apart from UBS, including A-share

brokerage and proprietary trading licences.

A majority stake, however, would allow

THEûlRMûTOûINTEGRATEûTHEû#HINESEûSECURITIESû

business more closely and could give it

access to more business as China reforms

its domestic capital markets. According

to a source at the bank, Goldman is not

currently able to sponsor IPOs on the new

tech-focused Star board because it lacks

the ability to invest in the deals through

AûSUBSIDIARYûASûREQUIREDûUNDERûTHEûLISTINGû

rules. (Goldman worked on the tech

board listing of China Railway Signal &

Communication as an underwriter.)

UBS, meanwhile, has sponsored two Star

BOARDû)0/SûSINCEûBECOMINGûTHEûlRSTûBANKû

TOûACQUIREûAûMAJORITYûPOSITIONûINûITSû*6û

UBS Securities, under the new rules last

December.

Goldman’s application comes after

"EIJINGûlNALLYûRELENTEDûINû!PRILûLASTûYEARû

following years of lobbying in allowing

FOREIGNûBANKSûTOûACQUIREûûSHAREHOLDINGSû

in their JVs.

(3"#ûWHICHûINVESTEDûUNDERûAûSPECIlCû

trade agreement between China, Hong

Kong and Macau, launched a majority-

owned JV in December 2017.

Credit Suisse and Morgan Stanley

are both nearing control having agreed

with their partners to increase their

shareholdings. JP Morgan and Nomura have

received preliminary approval to set up

majority-owned JVs from scratch.

Several other banks including DBS

Group, Oversea-Chinese Banking

Corporation and Societe Generale are also

LOOKINGûTOûENTERûTHEûINDUSTRYûFORûTHEûlRSTû

time.

Nonetheless, all of the JVs have so far

yielded only modest results. In 2018,

Goldman Sachs Gao Hua ranked second

among the seven largest Sino-foreign JVs

WITHûAûNETûPROlTûOFû2MBMû53M  

Goldman’s application also comes at a

time of heightened tension between the

US and China, although Beijing has been

at pains to assuage concerns that this will

affect an earlier pledge to open up its

lNANCIALûSERVICESûSECTOR

THOMAS BLOTT, KAREN TIAN

HKEx trading

fees down more

than a fifth

HONG KONG EXCHANGES AND CLEARING said

THATûTRADINGûFEESûDURINGûTHEûlRSTûHALFû

OFûTHEûYEARûFELLûBYûMOREûTHANûAûlFTHûASû

increasing political turmoil in the special

administrative region and China-US

tensions sapped investor sentiment.

The Hong Kong bourse said on August

14 that trading fees fell 21% to HK$952m

(US$121.4m) for the six months to June

30 as a 25% drop in average daily turnover

OFûEQUITYûPRODUCTSûWASûPARTIALLYûOFFSETûBYû

higher fees from Stock Connect.

Overall revenues edged up 5% to

(+BNûWHILEûPROlTûWASûUPûûTOû

(+BNûASûTHEûEXCHANGEûBENElTEDûFROMû

higher listing fees due to more IPOs during

H1 19 and higher investment income,

which it attributed to higher interest rates.

HKEx said that listing fees during H1 19

increased by HK$30m to HK$475m as the

number of new listings on the main board

rose to 78 compared with 58 during the

same period last year.

This occurred in spite of a dearth of

SIZEABLEû)0/SûINûTHEûlRSTûHALFûAFTERû!NHEUSER

Busch InBev called off the proposed

HK$76.6bn IPO of its Asian unit last month.

Stock Connect remained a bright spot for

the exchange with northbound turnover

setting a new daily record of Rmb77.4bn

(US$10.99bn) on May 6 following the

increase in weighting of A-shares in MSCI’s

emerging markets index.

"ONDû#ONNECTûALSOûHADûAûSTRONGûlRSTû

half, reaching a record daily turnover of

Rmb16.2bn in June, which the exchange

attributed in part to the inclusion of RMB-

denominated bonds in the Bloomberg

Barclays Global Aggregate index.

Karen Sui, analyst at CMB International,

said that the exchange’s results were “in

LINEvûWITHûEXPECTATIONSûBUTûNOTEDûTHATû

ITûWASûUNLIKELYûTOûBENElTûFROMûHIGHERû

investment income in the second half

and the macro environment remained

turbulent.

THOMAS BLOTT

People

&Markets

Who’s moving where...

„ HSBC’s former

Asia co-head of equity

capital markets Alexis

Adamczyk has joined

Hong Kong-based

property developer

FAR EAST CONSORTIUM

INTERNATIONAL as

head of corporate

development and

M&A.

Adamczyk, who

left HSBC in March

after more than 13

years, previously

ran the ECM team

in the region before

HSBC poached

Chito Jeyarajah from

Goldman Sachs in

2017. Jeyarajah was
      appointed sole head
      after Adamczyk left
      earlier this year.
      Before HSBC,
      Adamczyk worked at
      Deutsche Bank for
      eight years.

„ Kelvin Teo has left

his job as director in

Credit Suisse’s equity

capital markets

team to join BANK OF

SINGAPORE, the private

banking arm of OCBC

Bank.

As head of bespoke

investments for Greater

China and North Asia,

Teo will help develop

BOS’s bespoke offering

to ultra-high-net-worth

clients including direct

investments in regional

unicorns, buyout funds

and property-related

financial instruments.

He is based in Hong

Kong.

Teo spent just

over eight years at

Credit Suisse having

previously worked at

Macquarie Group for

five and a half years.

„ AUSTRALIA AND NEW

ZEALAND BANKING GROUP

has appointed Emily

Tonkin as director in

its sustainable finance

team.

Based in Sydney, she

reports to Katharine

Tapley, head of the

sustainable finance

unit, which sits within

ANZ’s loans and

specialised finance

group.

Tonkin joined ANZ in

2014 and was most

recently a director

in its institutional

property group. She

held earlier roles

in leveraged and

acquisition finance

and corporate

banking.

Tonkin was previously

with Royal Bank of

Scotland and ABN

AMRO.