China raises caps on foreign ownership in financial institutions

The Chinese Vice Finance Minister Zhu Guangyao stated today that foreign companies would be permitted to own stakes of up to 51 percent in securities brokers and life insurers. The government will also remove the cap of 20 percent on foreign ownership in Chinese banks but no details were given yet.

The relaxation of existing curbs will ease restrictions on investment inflows to China directionally, noted ANZ in a research report. But the scale of its impact will depend on the valuation of China’s financial institutions, and a more precise figure would need a careful assessment of their equity value. With the rapid growth in financial assets in the last few years, there might be a slew of positive headlines carrying positive emphasis on their value, stated ANZ.

At the macro level, China is entering a “new era” and is likely to see growth in the global operations of local Chinese banks, added ANZ.

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