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JPMorgan (JPM) Seeks China’s Approval for a Joint Venture


As part of its efforts to expand into newer markets, JPMorgan Chase & Co. JPM wants to set up a joint-venture brokerage in China. For this, the company is seeking approval from the securities regulator in the country.

Gao Li, a spokeswoman for the China Securities Regulatory Commission, recently stated that J.P. Morgan Broking (Hong Kong) Ltd., a unit of JPMorgan, submitted an application to acquire 51% stake in a Chinese securities venture. Li also informed that the application will be efficiently reviewed by the regulator.

This move by the bank comes after China pledged to open its financial markets for foreign investors. In April, the Chinese authorities released guidelines, giving permission to foreign companies to own a maximum 51% of their local securities joint ventures. Notably, the country is expected to remove all ownership limits for foreign companies after 3 years.

JPMorgan’s CEO, Jamie Dimon visited China a few days ago. He is optimistic about the company’s plans to expand into the Chinese economy and hopes that the increasing trade tensions will not create any barriers for the same.

According to a person familiar with the matter, the company wants to learn more about investing in China so that it can cover more clients and hence expand its business in the country.

A few days before JPMorgan’s application, other companies like UBS Group AG UBS and Nomura Holdings, Inc. NMR also submitted their applications for gaining control over 51% stake in the country’s securities joint ventures.

Also, some other firms like Morgan Stanley MS and The Goldman Sachs Group, Inc. have a desire to control their joint ventures in China.

Notably, while JPMorgan intends to expand into 15-20 new markets (starting in Virginia, Washington, DC and Maryland) by opening up to 400 new branches and hiring as many as 3,000 employees through 2023. It is also focused on increased automation with fewer employees. Thus, the company continues with its efforts to reduce the size of the branches, given the increased usage of online banking and ATMs.

Shares of the company have gained 31.5% in the past year, outperforming 18% growth of the industry.

Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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