BUSINESS
16 | Thursday, August 22, 2019 CHINA DAILY
By LI XIANG and ZHOU LANXU
The Goldman Sachs Group Inc is
seeking regulatory approval to own
a majority stake in its securities
joint venture in China, a step that
will make it the latest foreign invest-
ment bank to take advantage of the
further opening of the financial sec-
tor by the country.
A spokeswoman at Goldman
Sachs’ Beijing office confirmed on
Wednesday the US bank’s plan to
boost its stake in Goldman Sachs
Gao Hua Securities Co to 51 percent
from 33 percent. Beijing Gao Hua
Securities Co currently owns 67 per-
cent of the joint venture company.
Information on the website of the
China Securities Regulatory Com-
mission (CSRC) showed that the
regulator received Goldman Sachs’
application on Monday.
Dong Dengxin, director of Wuhan
University of Science and Technolo-
gy’s Finance and Securities Insti-
tute, said Goldman Sachs’ decision
to expand investment in China
showed its confidence in the Chi-
nese market.
“The resilience of the domestic
economy, opportunities in the bur-
geoning capital markets and
recent opening-up policies have
made the Chinese market a new
major arena for global financialinstitutions,” Dong said.
Goldman Sachs plans to eventual-
ly move employees and businesses
from Beijing Gao Hua into Goldman
Sachs Gao Hua, a report by Bloom-
berg said citing a person with
knowledge of the matter who asked
not to be identified.
The New York-based financial
group will become the latest foreign
bank to gain control of its invest-
ment banking business in China as
the country steps up financial liber-
alization to give foreign companiesChicken production firms ring up
strong growth in the first six months
By ZHU WENQIAN
[email protected]
Chicken farming enterprises in
China have reported sterling results
in the first half of the year, as grow-
ing demand and tight supply have
bolstered prices.
With the approach of traditional-
ly busy seasons such as the new
semester for schools, Mid-Autumn
Festival, and the National Day holi-
day, continued robust market
demand is expected, and chicken
prices also are expected to climb
over the rest of the year.
In the first six months, the total
number of slaughtered broiler chick-
ens hit 4.2 billion nationwide, up 15.
percent year-on-year. Total chicken
production reached 6.64 million
metric tons, 13.5 percent higher year-
on-year, the Ministry of Agriculture
and Rural Affairs said.
Chicken has stepped in to fill the
gap in consumption caused by short
supplies and higher prices of pork
caused in part by African swine
fever.
From July last year to May, prices
of young broiler chickens edged up
from 3 yuan (4 cents) each to about
10 yuan each. Prices of chicken
products and young birds are seen
picking up and industry experts are
bullish on the growth of the whole-
year earnings of chicken farming
companies.
“Yantai, Shandong province saw
ex-farm prices of chicken reach their
highest point in years. Chicken
farming enterprises, especially
breeders, are likely to hit their bestearnings in decades. In the first half,
the gross profit of chicken raising
enterprises grew about 30 percent,”
a research report of Everbright
Securities said.
From January to June, A-share
market listed industrial players,
such as Shandong Minhe Animal
Husbandry Co Ltd, Shandong Yish-
eng Livestock & Poultry Breeding Co
Ltd, Fujian Sunner Development Co
Ltd, and Liaoning Wellhope Agri-
Tech Joint Stock Co Ltd posted net
profit of 869 million yuan, 904 mil-
lion yuan, 1.65 billion yuan and 359
million yuan respectively.
All enterprises more than dou-
bled their net profit over the same
period a year ago.
Share prices of many of the com-
panies have shot up as a result.
Shandong Minhe stock has more
than tripled since the start of the
year, closing on Wednesday in Shenz-
hen at 35.87 yuan per share. Since the
start of the year, the stock has soared
more than 208 percent in value.
Shares of Wellhope Agri-Tech
climbed 68 percent so far this year
and ended on Wednesday at 13.
yuan, nearly doubling in price from
the beginning of the year.“With the surge of prices of young
chickens, most listed chicken rais-
ing enterprises achieved their high-
est profits since they debuted.
Backed by a growing industry, prof-its hopefully will climb continuous-
ly,” said a research report of Haitong
Securities.
Industry reports noted that avian
influenza, price increases of youngchickens and changes in consump-
tion habits may have an impact on
the sector, and this in turn could
cause fluctuations in both revenue
and profit.Goldman Sachs plans to increase stake in Chinese JV
Move shows foreign investment bank’s
confidence in China market, says expert
greater access to the Chinese mar-
ket.
Swiss bank UBS Group increased
its share holding in its China securi-
ties joint venture to 51 percent in- In March, US bank JPMorgan
and Japanese financial group Nom-
ura also gained regulatory approval
to own a majority stake in their
securities venture in China.
Morgan Stanley is also seeking
regulatory approval to own a major-
ity stake in its China securities JV,
information published on the CSRC
website showed.
The Chinese government has
vowed to remove foreign ownership
restrictions in the securities, fund
management, futures and life insur-
ance industries next year.
Analysts said the move by Gold-
man Sachs showed that foreign
banks remain bullish about the
prospects of their business in China
as further financial liberalization is
expected to bring more business
opportunities.
Once they get majority ownership
in joint ventures, foreign financial
institutions will have more say in
their management and decision-
making, leveraging the advantages
associated with a high level of inter-
nationalization, Dong explained.
But owning a majority stake does
not guarantee business success in
China and foreign banks still face
challenges in penetrating the Chi-
nese market and making their busi-
ness profitable.
Dong said owning a controlling
stake could help change the situation
for joint ventures, which currently
have a small market share in China,adding it will also push domestic
players to sharpen their services.
Xue Yi, a professor of finance at
the University of International Busi-
ness and Economics in Beijing, said
that China’s registration-based ini-
tial public offering reforms, which
kicked off on Shanghai’s Nasdaq-
like STAR Market, can provide
investment banks such as Goldman
Sachs more opportunities.
“Foreign investment banks are
typically more experienced with the
registration-based IPO system than
domestic players,” Xue said, adding
that participation by foreign invest-
ment banks could lead to a smooth-
er implementation of the reform
plan.Contact the writers at
[email protected]33
percent
stake that Goldman Sachs cur-
rently holds in its JV, Goldman
Sachs Gao Hua Securities CoEmployees process poultry products at a facility in Shenyang, Liaoning province.PROVIDED TO CHINA DAILYChicken farming
enterprises,
especially breeders,
are likely to hit their
best earnings in
decades. In the first
half, the gross profit of
chicken raising
enterprises reached
about 30 percent.”
Everbright Securities’ research
report
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