UBS China Asset Swap: Liberalisation Would Be Positive For HSBC, Pru, StanChart

Reports indicate UBS is looking to take full control of its local branch in China, in exchange for handing over CS assets. Very small but could be interesting sign of Chinese liberalisation of capital markets – HSBC standing to be a key beneficiary.

• Chinese regulators have, in most cases, insisted onshore business be JVs with local firms and sometimes with stakes being owned by state-related entities. This is actually not unlike some other territories (e.g. India) wary of rapid foreign takeover of domestic assets and industries.
• China has taken a paced approach to liberalising its capital markets and firms such as UBS, Standard Chartered and HSBC have generally navigated this well and built interesting businesses, if small in group contexts.
• This simplification for UBS in that market would be a positive but immaterially small. If this is a sign of further liberalisation coming, UBS alongside HSBC, Prudential and StanChart could be some key beneficiaries. This growth should be a spread positive, we feel. (UBSG SW) (HSBA LN) (STAN LN) (PRU LN)