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The Goldman Sachs Group, Inc. GS is mulling to recruit more than 400 people in mainland China and Hong Kong, in order to capitalize on the competitive spree by foreign lenders aiming to take full control of their mainland China joint ventures and pursue new licenses to sell directly to customers in the region. The news was first reported by Bloomberg.
The move comes as Beijing continues to opens up parts of its finance sector such as asset management, insurance and securities for investments by foreign companies.
According to a person familiar with the matter, the bank has registered or is in the process of filing 320 positions, which includes 70 positions in its investment bank. It also intends on adding another 100 positions by the end of this year.
Goldman Sachs has operated in Chinese capital markets since the 1990s and started the joint venture in 2004. In December 2020, it entered into an agreement with its Chinese partner, Beijing Gao Hua Securities, to take full control of the venture.
Goldman Sachs generates revenues largely from Asia. According to its annual report, it had employed 40,500 employees last year, with 28% of them in Asia. Moreover, Asia accounted for 14% of the bank’s revenues in 2020.
With this trend, the bank’s top line will likely be diversified further, geographically. Management intends to grow and fortify its existing China business, expanding the target market and investing in the right talent and technology.
Goldman Sachs’ plan to boost its Hong Kong and China operations follows other lenders’ moves who are hiring in the region too, in anticipation of a continued ‘homecoming’ of U.S.-listed Chinese firms pursuing secondary listing in Hong Kong.
This March, Citigroup Inc. C was in news for plans to recruit nearly 1,700 people in Hong Kong, in a bid to gain from the accelerating capital flows between the city and mainland China. Along with hiring more than 5,000 people in its wealth management unit over the next five years in Asia, HSBC Holdings plc HSBC will inject $3.5 billion worth capital, as announced in February. Credit Suisse Group CS also aims to triple its headcount in China over the next three years by taking full control of its mainland securities joint venture and strengthening business in the nation.
As banks raise their holdings in the mainland, Hong Kong will remain an integral international finance center as China continues to open up globally.
Goldman Sachs’ elevated investment and prominence in Asia will likely support its top line and keep bolstering the bank’s profitability as well.
Goldman Sachs is also poised to benefit from the further integration between Hong Kong and other cities in the Greater Bay Area, including the intended Wealth Connect cross-border scheme. The scheme will permit banks in the city to market their wealth management products directly to mainland clients. It follows a similar scheme for both stocks and bonds.
Shares of Goldman Sachs have gained 64.4% over the past six months, outperforming the industry’s growth of 52.9%.
Currently, Goldman Sachs 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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