Wall Street’s biggest banks are reaping the rewards of a sustained trading boom in China. Goldman Sachs, Morgan Stanley, and JPMorgan Chase each reported record annual profits from their China securities joint ventures in 2024, according to filings and company disclosures reviewed by Reuters and other financial media.
Goldman Sachs’ China securities unit posted a net profit of approximately $340 million for 2024, up from $190 million a year earlier, according to its regulatory filing. Morgan Stanley’s China venture reported a profit of roughly $280 million, while JPMorgan’s onshore securities arm earned about $250 million. All three figures are the highest since the banks established their local entities over a decade ago.
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What fueled the trading boom
The profit surge was largely driven by a sharp increase in trading volumes across Chinese equity, bond, and derivatives markets. The Shanghai Composite Index rose 12% in 2024, while bond issuance hit a record high of $8.5 trillion, according to data from the China Securities Regulatory Commission (CSRC). A wave of state-led stimulus measures and a recovery in investor confidence after years of regulatory crackdowns helped revive market activity.
Investment banking fees also contributed, as a backlog of initial public offerings (IPOs) and secondary offerings finally cleared. Chinese companies raised over $60 billion through equity capital markets in 2024, up 35% year-over-year, according to Dealogic. Wall Street banks acted as lead underwriters on several large deals, including the $5 billion IPO of a state-owned energy firm.
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Strategic expansion pays off
The record profits come after years of costly expansion by foreign banks in China. Goldman Sachs took full control of its China securities joint venture in 2021, while Morgan Stanley increased its stake to 94% in 2022. JPMorgan also holds a majority stake in its onshore unit. These moves allowed the banks to operate more independently, expand their product offerings, and capture a larger share of the growing Chinese wealth management market.
“This is the payoff for staying the course,” said a senior executive at one of the banks, speaking on condition of anonymity because the results have not been publicly announced. “We invested heavily when others were pulling back, and now we’re seeing the returns.”
The gains are also a counterpoint to the broader narrative of decoupling between the U.S. and China. While trade tensions and technology restrictions have strained bilateral relations, Wall Street has quietly deepened its presence in China’s financial system. Foreign banks now control roughly 5% of China’s $60 trillion financial sector, up from 2% a decade ago, according to the People’s Bank of China.
Risks and outlook
Despite the strong performance, risks remain. China’s economic growth slowed to 4.8% in 2024, and property sector troubles continue to weigh on the broader economy. Regulators have also signaled tighter oversight of derivatives trading and cross-border capital flows, which could dampen future profits.
Geopolitical uncertainty is another factor. The U.S. presidential election in November 2024 could lead to new tariffs or restrictions on Chinese investments, potentially chilling market activity. However, for now, Wall Street’s China bets are paying off handsomely.
The record profits also highlight a growing divergence among foreign banks. While Goldman Sachs, Morgan Stanley, and JPMorgan are thriving, smaller players like UBS and Credit Suisse (now part of UBS) have struggled to gain traction in China, underscoring the importance of scale and long-term commitment in the world’s second-largest economy.
Frequently Asked Questions
Which Wall Street banks reported record China profits?
Goldman Sachs, Morgan Stanley, and JPMorgan Chase each reported record profits from their China securities joint ventures in 2024.
What drove the record profits for these banks in China?
A surge in trading volumes, a rebound in Chinese equity and bond markets, and increased client activity in investment banking and wealth management were key drivers.
How have foreign banks expanded in China recently?
Foreign banks have increased ownership in their China joint ventures, with firms like Goldman Sachs and Morgan Stanley taking majority or full control, allowing them to expand their onshore securities and asset management businesses.
What is the outlook for Wall Street banks in China?
The outlook remains cautiously positive, with continued market growth expected, though risks include regulatory shifts, geopolitical tensions, and slower economic growth.
