Credit Suisse, Morgan Eye China Ventures

Credit Suisse (CS) and Morgan Stanley (MS) are one step closer to tapping China's lucrative investment banking market, which has been off limits due to a moratorium on new joint ventures since late 2005. Credit Suisse has signed a memorandum of understanding to form a JV with China's Founder Group, according to a draft internal memo. Founder Group is a Beijing-based conglomerate with $8B of assets under management and has a brokerage arm ranked among the largest 20 in the country. Meanwhile, Morgan Stanley is reportedly partnering with Shanghai-based China Fortune Securities. Morgan already owns 34% of China International Capital Corp., a leading domestic underwriter, but its role has become increasingly passive.

Data from Thomson Financial show year-to-date through Nov., China leads global IPO proceeds and issues rankings, with $87.3B in 195 listings vs. second-ranked USA with $38.5B in 174 listings. Goldman Sachs (GS) and UBS (UBS) also have I-banking ventures in China. Credit Suisse shares gained 3.6% on the Virt-x exchange Monday morning. Credit Suisse is among the top holdings of the Switzerland ETF EWL and Morgan Stanley is a core holding of the ETFs IAI and KCE.

Sources: Bloomberg, Wall Street Journal
Additional Reading: Citigroup Lowers Earnings Estimates at Three Major I-Banks • Managing Your ADRs: The Case of European Financials • Has China's IPO Boom Run its Course?

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