In a welcome boost after this year's devastating subprime losses, Bear Stearns today moved to secure a long-coveted slice of the Chinese market. Stearns and China’s Citic Securities Co. agreed to invest $1 billion in each other, pooling their Asian resources to develop new products for the Chinese market, and launching a Hong Kong-based joint venture to reach markets outside China, Bloomberg reports.
The deal is contingent on approval from both the US and Chinese governments. “For a Chinese company to buy a stake in a US company, they need to show they can be trusted,” said one analyst. Citic would acquire roughly 6% of Bear Stearns, and Stearns over time a 2% stake in Citic. Stearns’ CEO called the alliance “groundbreaking,” and promised “substantial new revenues” for Stearns, whose stock has fallen 37% this year.