China stands firm on 33% foreign cap

CHINA will keep its 33-percent cap on foreign ownership of joint-venture brokerages, resisting opening its market further to foreign competition.

Revised rules, which take effect next year, relax some requirements for foreigners, Bloomberg News reported.

The regulations will let investors from abroad buy into publicly traded brokerages and cap foreign ownership at 20 percent for single investors, and 25 percent for total foreign-owned stakes, the China Securities Regulatory Commission said in a statement on its Website yesterday.

The limit for private ventures will remain at 33 percent.

Wall Street shield

China is shielding the domestic brokerage industry from Wall Street firms, including Goldman Sachs Group Inc, a policy that's helped make Beijing-based CITIC Securities Co Asia's biggest brokerage by market value.

Investors in China, where stocks have rallied more than five-fold the past two years, have diverted US$2.2 trillion of household savings into equities after opening more than 47.5 million trading accounts this year.

Best performer

China's CSI 300 is the world's best-performing major index this year.

UBS AG, Europe's biggest bank by assets, is the only foreign company with management control of a joint venture and a full license.

It owns 20 percent of the venture, formed with Beijing Securities Co last year and has a full brokerage license, allowing it to underwrite share sales, trade stocks for clients, and engage in proprietary trading and asset management.

It's the fourth-largest arranger of Chinese domestic stock offerings this year, with an 11-percent market share.