SHANGHAI - China last week commissioned its first home built aircraft carrier to project its military might. It's now on a mission to create"aircraft carrier-sized" investment banks to take on Wall Street's giants.
"Compared with either domestic banks, insurers, or their global peers, Chinese brokers are too small to play a meaningful role in the financial market," said Jiang Zhongyu, a Shanghai-based analyst at Essence Securities."The country's capital market development calls for a heavyweight broker." UBS Group AG , JPMorgan Chase and Co, Nomura Holdings Inc have already gained majority control of local joint ventures, while Goldman Sachs, Morgan Stanley and others have applied to follow suit in a bid to capture an estimated US$9 billion in annual profits for brokers and banks.
Chinese brokerages have largely been involved in less capital demanding business such as trading and underwriting after three decades of development. They will need capital to build out a broader array of investment banking services, market making and margin lending. Meanwhile, many small- and medium-sized firms are struggling as an exodus of retail investors halved income in 2018.