Citi Reportedly Plans To Launch Wholly Owned China Unit Amid Economic Slowdown: Is The Risk Worth It?
Portfolio Pulse from Nabaparna Bhattacharya
Citigroup Inc. (C) is planning to launch a fully-owned investment banking unit in China by the end of the year, aiming to hire about 30 people initially and potentially expanding to nearly 100. The Chinese securities regulator approved the U.S. bank's application last month. Citi's move follows similar expansions by Goldman Sachs (GS), JP Morgan (JPM), and Morgan Stanley (MS) in China. The expansion is seen as risky due to China's slowing economic growth and evolving policies.
January 04, 2024 | 1:14 pm
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Citigroup plans to launch a wholly-owned investment banking unit in China, aiming to hire around 30 people, with potential expansion plans.
While the expansion into China could offer long-term growth opportunities for Citigroup, the current economic slowdown and policy uncertainties in China may temper short-term investor enthusiasm.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 100
NEUTRAL IMPACT
Goldman Sachs has previously increased its equity stakes in local brokerage businesses in China, similar to Citigroup's current expansion plans.
Goldman Sachs has already made moves to increase its presence in China, so Citigroup's new venture may not have a significant short-term impact on GS's stock.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50
NEUTRAL IMPACT
JP Morgan has also increased its presence in China's brokerage sector, which is a market Citigroup is now entering.
JP Morgan's existing investments in China mean that Citigroup's expansion is not a new competitive dynamic, likely resulting in a neutral short-term impact on JPM's stock.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50
NEUTRAL IMPACT
Morgan Stanley, like Citigroup, has increased its equity stakes in China's local brokerage businesses in recent years.
Morgan Stanley's stock is unlikely to be affected in the short term by Citigroup's announcement, as it has already established its position in the Chinese market.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50