With China opening up its financial sector, worth trillions of dollars, foreign financial institutions can finally tap the Chinese market.
In a deal that will result in Morgan Stanley becoming the top shareholder of Morgan Stanley Huaxin Fund Management Co, the Wall Street bank has won an auction to buy an additional 5.5% stake in its China mutual funds joint venture.
Morgan Stanley currently owns 37.4% in Shenzhen-based Morgan Stanley Huaxin.
According to an auction notice on Taobao.com, it won the bid to increase its stake by 5.5% by sinking in a further $3.73 million (25.04 million yuan).
Morgan Stanley is buying the stake from a private shareholder in a court-appointed auction, which will see its stake surpass that of Huaxin Securities, which owns 39.56% in the joint venture.
Morgan Stanley’s purchase will now have to be approved by China’s securities regulators.
Morgan Stanley declined to comment.
Morgan Stanley’s move to increase its ownership in its Chinese joint venture fund comes in the wake of China opening its financial sector for bigger foreign participation.
Following U.S. trade action, in recent months China has allowed many foreign financial institutions to either set up new businesses onshore or expand their presence through majority ownership in domestic joint ventures.
Under its new rules, announced in late 2017, Beijing has paved the way for foreigners to own up to 51% in their local mutual fund ventures.
($1 = 6.7169 Chinese yuan renminbi)