Goldman Sachs and Morgan Stanley become the latest foreign financial institutions to take advantage of China’s liberalizing financial sector.

Bids for majority ownership of Goldman Sachs Gao Hua Securities and Morgan Stanley Huaxin Securities were approved by the China Securities Regulatory Commission. Goldman Sachs will boost ownership from 33 percent to 51 percent while Morgan Stanley will see a slight uptick from 49 percent to 51 percent. 

Last year, Chinese authorities committed to greater foreign participation in its financial sector by lifting ownership limits in various licensed businesses including securities, futures and asset management. The two American banks join HSBC, UBS, J.P. Morgan, Nomura and Credit Suisse as foreign majority owners in their mainland-based securities unit.

More to Come

The historic opening of China’s financial sector is set to welcome more foreign participation and Goldman Sachs primed onlookers for more ownership. In addition to reported interest in launching a majority-owned wealth management joint venture, the American lender will also seek full ownership of the securities joint venture as soon as possible.

«This is a significant milestone in the evolution of our business in China,» said Todd Leland, APAC ex-Japan co-president of Goldman Sachs in a statement. «[W]e will be seeking to move towards 100 percent ownership at the earliest opportunity.»

«China is a core strategic focus for the firm,» said Wei Sun Christianson, APAC co-CEO and CEO of China at Morgan Stanley, who also signaled more coming growth. «[We] look forward to further investment in Morgan Stanley Huaxin Securities to provide the best advice and services to clients.»

Asset Management Opportunity

Securities aside, asset management in mainland China is considered as one of the most alluring opportunities in the latest liberalization moves. According to research firm Oliver Wyman, the market is expected to grow more than 10 percent per year as regulators drive investor shifts away from loan-based products with underlying loans outside of balance sheets – better known in China as shadow banking.

According to a «Bloomberg» report, at least six firms have currently expressed intentions to regulators to apply for a that will allow full ownership of an asset management unit. Global fund giants Blackrock and Vanguard are amongst the half-dozen applicants.