Securities joint ventures to be approved

Oct. 18 - China will soon resume
accepting applications for Sino-foreign securities joint ventures, a leading
regulator said Wednesday.

"We have always welcomed and encouraged the establishment of Sino-foreign
joint-venture securities firms," Tu Guangshao, vice-chairman of the China
Securities Regulatory Commission (CSRC), said on the sidelines of the 17th
National Congress of the CPC.

However, the approval of such institutions was suspended last year due to
the restructuring of local securities houses, Tu said, adding that the reshuffle
had been basically completed.

The CSRC will gradually expand the business scope of these firms, but Tu
did not offer a timetable.

Currently, joint ventures are allowed to engage only in underwriting and
are barred from brokerage and asset management businesses.

Goldman Sachs and UBS were the early birds in the Chinese market.

Goldman Sachs holds a 33-percent stake in Goldman Sachs Gaohua
Securities, while UBS last year managed to establish UBS Securities with Beijing
Securities prior to the one-year moratorium.

An evaluation of the operations of the UBS Securities and Goldman Sachs
Gaohua will be carried out, Tu said, while expressing his hope the two could be
successful not only in the short term, but also in the long run.

Tu said his agency is working on the rules for foreign investment in the
securities industry, but declined to reveal whether they will be released before
the end of the year.

In his report, President Hu Jintao called for everyone to stick to the
opening-up policy and the securities industry should also follow this path, Tu
said.

During a meeting in May with US Treasury Secretary Henry Paulson,
Vice-Premier Wu Yi pledged to open the Chinese securities industry to overseas
firms to comply with World Trade Organization rules.

Foreign investment banks are eager to make inroads into China, whose
stock market is on a remarkable bull run.

Stock investment accounts have reached 128 million and market
capitalization is now 28.58 trillion yuan ($3.8 trillion), giving Chinese
brokerages their biggest profits in a decade.

Granting entry to overseas investment banks is only part of the opening
up of the financial market.

"The country should in a gradual manner allow Chinese citizens to invest
in overseas markets, which is a general trend," he said.

That will help alleviate the pressure brought about by excessive
liquidity and expand people's investment channels, he said. However, overseas
investment is a complex issue and more studies are needed, including how to
protect investors.

On individuals' direct investment in the Hong Kong stock market, Tu said
preparations were under way and will be launched when ready.

The State Administration of Foreign Exchange said in August that
individuals will be allowed to buy stocks in Hong Kong through Bank of China
branches in Tianjin Municipality in a pilot scheme.