Credit Suisse JV offers expanded equity and trading services in China

China’s private fund industry continues to grow steadily, explaining why global financial institutions are keen to tap into onshore brokerage, irrespective of short-term uncertainties

Credit Suisse and its China securities joint venture Credit Suisse Founder Securities Limited (CSFS) have launched a new equity trading service that is tailored to domestic private securities investment funds. This move marks the further expansion of CSFS' client base and an enhancement of its onshore brokerage business.

Through the newly launched Asset Management Brokerage Trading Terminal, CSFS is further diversifying its institutional client base by offering trading and execution services to selected domestic private securities investment funds (including hedge funds), in addition to the public mutual funds and qualified foreign institutional investors (QFIIs), renminbi qualified foreign institutional investor (RQFIIs) and so on.

Commenting on the launch, Neil Hosie, head of equities for Asia Pacific at Credit Suisse, says: "This signifies that CSFS has made great strides in the domestic securities brokerage business. China's private fund industry has experienced robust growth as the regulatory environment continues to evolve. We will collaborate closely with CSFS to capture business opportunities and fully support both domestic and international investors with high-quality investment advisory services and superior execution capabilities."

To address the brokerage business's growth plans, Hosie adds: "Both Credit Suisse and CSFS are committed to continuing to invest in talent and resources to meet business needs. This includes a plan to significantly expand CSFS' office space, to ensure sufficient resources to support its expansion plans and the ongoing delivery of best-in-class services."

CSFS launched domestic brokerage services in November 2016, making Credit Suisse among the first global banks to operate an onshore brokerage business offering international investors direct access to the A-share market.

Despite recent upheavals in the Chinese financial markets, China's private securities investment fund industry has maintained steady growth and recorded growth of around 5% in the nine months through September 2018, reaching 2.4 trillion yuan in total assets under management (AuM) from more than 35,000 registered private securities investment funds, according to data from the Asset Management Association of China (AMAC).

While China pushes ahead with financial reforms, the MSCI announced in September this year it is considering increasing the weighting of China A-shares from the current 5% to 20%, to be implemented in phases. This indicates that international fund flows into the A-share market are expected to increase substantially in the future. As China continues to liberalize the domestic financial markets, an increasing number of global asset managers are also setting up operations in China.

"With a leading equities business in Asia Pacific, Credit Suisse will continue to offer best-in-class advisory and execution services to clients. Our bank will also act as a bridge in bringing international capital to the A-share market and supporting Chinese institutional investors in capturing opportunities in overseas markets via the Stock Connect and qualified domestic institutional investors programs," says Hosie.

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