Bear Stearns, China's Citic Trade $1B Stakes

Partnership will develop products, services for Chinese and Asian markets
By Kevin Spak,  Newser Staff
Posted Oct 22, 2007 9:02 AM CDT
Chen Xiaoxian, president of China CITIC Bank Corp. Ltd., strikes the gong to mark the start trading of the bank's shares, at the Initial Public Offering ceremony at the Shanghai Stock Exchange in Shanghai,...   (Associated Press)
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(Newser) – 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.