BlackRock Gets Nod to Set Up Majority-Owned JV in China

BlackRock BLK has become the latest U.S. financial firm to receive approval for setting up a majority-owned joint venture (JV) in China. The China Banking and Insurance Regulatory Commission approved a wealth management JV among BlackRock, Singapore state investor Temasek Holdings Pte Ltd and China Construction Bank Corp. on Saturday.

BlackRock already manages assets of a lot of high-net-worth clients in China. Thus, this is expected to further bolster its presence in the country. In a statement, the company mentioned, “This partnership is consistent with the U.S.-China efforts to open the Chinese market to US financial services firms.”

China continues to be one of the company’s top regions for growth. As the country is further opening up the financial sector for foreign companies, BlackRock wants to take advantage of this and expand therein. It has also applied for a fund management license to set up its wholly-owned mutual fund in the country.

BlackRock CEO Larry Fink, in his annual letter to shareholders, stated, “I continue to firmly believe China will be one of the biggest opportunities for BlackRock over the long term, both for asset managers and investors, despite the uncertainty and decoupling of global systems we’re seeing today.”

Over the past few years, the company has made several strategic acquisitions — domestic and overseas — that have aided top-line growth. Moreover, its strong global presence, broad product diversification, revenue mix and steadily improving assets under management are expected to aid revenues.

In addition to BlackRock, various other global finance companies are seeking to expand operations in China as the country removes foreign ownership limits on financial firms. Some of the firms already taking advantage of the available options include Vanguard Group Inc., JPMorgan JPM, Goldman Sachs GS, UBS Group, HSBC Holdings and Morgan Stanley MS.

Shares of BlackRock have gained 15.4% over the past six months against 26.9% decline recorded by the industry.

Currently, BlackRock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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