BNP Seeks to Beef Up China Operation on Investment Flows Bet
(Bloomberg) -- BNP Paribas SA, France’s biggest lender, plans to expand its China operations to include brokerage, futures trading and wealth-management ventures, as the bank anticipates further foreign investment flows into the world’s second-biggest economy.
CG Lai, chief executive officer of BNP Paribas China, said his firm was one of many international players establishing and expanding their presence in the country. The moves come as index providers including MSCI Inc. add Chinese stocks and bonds to international benchmarks, ensuring greater participation by offshore investors.
“We are here trying to build a whole ecosystem to receive the incoming foreign players,” Lai said in an interview in Shanghai. “We see the Chinese market as a big one for investment.”
China’s policy makers have this year repeatedly stressed their determination to further open the nation’s financial system, building on earlier promises that they would better integrate the more than $40 trillion sector into the global economy. Greater foreign involvement will provide a timely boost for the domestic industry amid an economic slowdown and trade frictions, while Wall Street firms stand to reap billions of dollars in profit from a new market.
UBS Group AG was the first overseas firm to win approval to raise its ownership in a local securities venture to 51 percent under new rules. Nomura Holdings Inc. and JPMorgan Chase & Co. have also filed applications for majority ownership in securities ventures.
BNP pulled out of an investment banking venture with Changjiang Securities Co. in 2007, selling its minority stake to the Chinese brokerage after disagreeing on strategy. The French firm is the largest shareholder of Bank of Nanjing Co., with a 15 percent stake, and owns 49 percent of HFT Investment Management Co.
Lai wouldn’t comment on whether BNP plans to increase its stakes in either Bank of Nanjing or HFT Investment.
Foreign institutions and individuals held about 3 percent of domestic Chinese stocks and 2 percent of bonds by the end of 2018, according to the central bank. Lai predicted that overseas holdings would reach 15 percent of the bond market within seven years, and said the stock market would hit that mark sooner.
Gauges operated by compilers including MSCI and FTSE Russell, a unit of London Stock Exchange Group Plc, are among those adding Chinese stocks, while some of its bonds are set to be included in the Bloomberg Barclays Global Aggregate Index in April. Bloomberg LP, which operates the index, is the parent company of Bloomberg News.
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