JPMorgan says China growth takes longer, eyes Japan market

JPMORGAN Chase & Co said the bank’s China expansion is taking longer than expected, as it gears up to invest more in the Japanese and Australian markets to take advantage of growth potential.

“In the current macroeconomic environment, we believe for a variety of different reasons that those two countries offer incredible opportunities over the coming few years,” JPMorgan’s Asia-Pacific chief executive officer Filippo Gori said in a Bloomberg TV interview at the bank’s annual Global China Summit in Shanghai on Wednesday (May 31). “We continue to look at investing further in both Japan and Australia.”

In an earlier interview at the summit, JPMorgan’s China chief executive officer Mark Leung said the bank’s expansion in China was taking more time. “It will be a longer journey than we would wish to gradually build up scale and reputation to do business,” he said.

Global banks are reassessing their businesses in China as a sluggish economy, geopolitical tensions and intense domestic competition has pared ambitions to take advantage of the opening of the country’s US$60 trillion financial sector to foreign firms.

At the same time, markets like Japan have stood out as an alternative opportunity for investors wrestling with the uncertainty from the US-China strains, and domestic challenges in both the US and Chinese markets. Japan’s Topix Index reached its highest level since 1990 this month.

Still, Gori said JPMorgan remained committed to the Chinese market – where it has doubled headcount and quadrupled its licences in the last four years – and that the current slowdown isn’t a concern long term. JPMorgan’s China business is seeing growth from wealth management fees, he added.

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Leung said one way JPMorgan hoped to distinguish itself from domestic peers in the Chinese market was on cross-border deals and transactions. “Going cross-border as the differentiator is the key,” he said. There’s also still healthy volume of initial public offerings onshore in China and Hong Kong, he added.

Although dealmaking has slowed globally, Gori said the deal pipeline in Asia could recover in the second half of 2023 into next year.

“I believe that the second half of the year, whether it’s China or the rest of Asia Pacific, will have a flurry of activity coming up,” he said. BLOOMBERG