Chinese to relax securities barriers

BEIJING – Beijing is easing a ban on foreign investment in the securities industry but ensuring Chinese control by limiting investors from abroad to minority stakes.

A foreign investor may own no more than 20 percent of a Chinese securities firm, and total foreign ownership of any firm is limited to 25 percent, the China Securities Regulatory Commission said on its Web site.

Each securities firm must also have a Chinese owner with at least a 33 percent stake, the ministry said in a statement dated Saturday, ensuring the dominant shareholder is Chinese.

Overseas banks are eager to expand in China and China needs access to foreign capital and skills. But regulators banned new ventures in late 2005 while Beijing carried out an overhaul of struggling Chinese firms.

Foreign business groups have complained that China improperly limited foreign investment in violation of commitments to the World Trade Organization.

The investment restrictions limited the ability of global banks to profit from China’s market boom, which saw the country’s main stock index rise by 97 percent in 2007.

The Shanghai Stock Exchange – one of two in China – was the world’s second-most popular place for initial public offerings in 2007.

Companies raised $48.6 billion in Shanghai through November, compared with $52 billion raised in IPOs on the New York Stock Exchange.