JPMorgan Expands Analyst Hires as China Market Opening Quickens

(Bloomberg) -- JPMorgan Chase & Co. is planning to expand its equity research team covering Chinese companies by more than 50 percent this year, as the largest U.S. bank seeks to meet rising client demand for analysis while China quickens the pace of opening its financial markets.

The new hires, mostly senior analysts focusing on sectors from tech and consumer goods to financials and industrials, will help double the bank’s coverage of China-listed companies to more than 200, said James Sullivan, JPMorgan’s head of Asia ex-Japan equities research. The hiring plan is more ambitious than one he said a few months ago was to expand headcount by 30 percent to 40 percent from the end of last year.

“You’re seeing significant incremental interest from our institutional investors across all sectors,” Sullivan said in an interview in Beijing. About 80 percent of this year’s hiring has already been completed, and a further 30 percent to 40 percent increase next year is being considered, he added.

Chief Executive Officer Jamie Dimon on Tuesday laid out his long-term vision for JPMorgan’s expansion in China, saying the company is “building here for a hundred years.”

Mature Market

While the bank is still seeking 100 percent ownership of a Chinese brokerage operation, Sullivan said its fundamental research can now provide greater value as more institutional investors view China as a “buy-and-hold” market for the next five to 10 years. The inclusion of some domestic equities in MSCI Inc. international stock indexes has also boosted demand.

“The environment over the past couple of years has arguably seen a significant maturization of the onshore markets,” he said, citing less sentiment-driven volatility. “As a result, institutional investors can now find globally relevant brands with very good forecastable earnings growth prospects at reasonable valuations.”

This year’s new hires have included analysts from other global banks and large domestic research teams, Sullivan said, while declining to give any names or staff numbers. The company’s focus on skills including local language and cultural understanding means “realistically” analysts from the Chinese mainland are more likely to meet its requirements, he added.

JPMorgan decided more than a year ago to exit a minority-owned Chinese investment-banking joint venture, with Dimon highlighting that such setups tend to have corporate governance shortcomings. Since then, China has pledged to allow foreign firms to own majority stakes in securities ventures, even as the country engages in a trade spat with the U.S.

To contact Bloomberg News staff for this story: Zhang Dingmin in Beijing at dzhang14@bloomberg.net.

To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Peter Vercoe, Russell Ward

©2018 Bloomberg L.P.

With assistance from Zhang Dingmin