The Close Connections Between JPMorgan and the CCP
The financial giant is hit by the CCP virus
Commentary by Wang Jin
May 4, 2020. Updated May 4, 2020
In April the CCP virus (novel coronavirus) pandemic spread in the trading department of JP Morgan ’s Manhattan headquarters. The Wall Street Journal reported on April 7 that about 20 employees on the fifth floor of JPMorgan Chase ’s headquarters tested positive for the CCP virus, and 65 others were quarantined; many traders who buy and sell stocks and sell trading strategies to customers work on the fifth floor of the building.
Bill Pike, a former senior executive at JPMorgan Chase, also passed away on March 18 due to infection with the CCP virus.
JPMorgan Chase, headquartered in Manhattan, New York, is the largest financial services institution in the United States, with assets larger than Bank of America, Wells Fargo, or Citigroup. Why has the CCP virus hit JPMorgan Chase so hard?
An editorial in The Epoch Times points out that “the heaviest-hit regions outside China all share a common thread: close or lucrative relations with the communist regime in Beijing,” and “any country, community, or organization that keeps too close to the CCP and falls for its deception will taste the bitter fruits of that involvement.”
What is the relationship between JP Morgan and the Chinese Communist Party (CCP)? This article explores the symbiotic relationship between the two as a cautionary tale.
Chinese Companies Listed in the U.S. Market Finance the CCP Like Blood Transfusions
For decades, JPMorgan Chase has played a key role as a lead underwriter to help many Chinese companies secure IPOs (initial public offerings) in the United States or Hong Kong, raising an astonishing amount of U.S. capital for the CCP.
A lead underwriter, per the Divestopedia website, is “usually an investment bank that helps an organization to sell its shares to the public for the first time. In the case of large offerings, a group of underwriters come together to form a syndicate and the entity leading this syndicate is the lead underwriter.”
China’s WeDoctor plans to list in Hong Kong in the second half of 2020 and plans to make an initial public offering of U.S. $1 billion. JPMorgan Chase is also one of the listed underwriters chosen by WeDoctor.
According to data from China’s Baidu Baike (Chinese online Encyclopedia), JPMorgan Chase ranks first in Asian stocks and stock-related issuances since 1993. Since then, the company has underwritten 88 stock transactions for Asian companies. Since this is not the latest data, the number of stock transactions it has actually underwritten is likely higher than this.
Which Chinese Companies Worked With JPMorgan Chase for U.S. or Hong Kong IPOs?
The following are just a few examples of Chinese companies working with JPMorgan Chase on IPOs, based on the public information released by the US-China Economic and Security Review Commission (USCC), on Feb. 25, 2019 and reports from Chinese state media:
In 2014, Alibaba raised $21.8 billion in its IPO in New York. JPMorgan Chase and six other investment banks acted as its lead stock underwriters. As of Feb. 25, 2019, Alibaba’s market value exceeded $458.6 billion.
In a document submitted to the U.S. securities regulator, Alibaba stated that the banks handling its IPO were set to receive a total of $300.4 million in commissions, or more than 1% of the proceeds.
In November 2019, Alibaba re-listed its public offering in Hong Kong. Five well-known investment banks, including JPMorgan Chase, were underwriters of Alibaba’s secondary listing in Hong Kong. Mainland China’s media reported that the offering raised about $15 billion.
Alibaba has a close relationship with CCP “princelings” (children of key communist officials). According to the New York Times, some of the executives of all four Chinese companies investing in Alibaba are the children and grandchildren of more than 20 CCP officials who served on the Standing Committee of the Political Bureau of the CPC Central Committee after 2002, including Jiang Zemin’s grandson “Alvin” Jiang Zhicheng.
In 1996, Guangshen Railway was listed in New York and Hong Kong, raising more than $500 million dollars. JPMorgan Chase was one of its underwriters. As of Feb. 25, 2019, the market value of Guangshen Railway exceeded $3.1 billion.
In 2000, PetroChina went public in New York and raised more than $680 million. JPMorgan Chase was one of its lead underwriters. As of Feb. 25, 2019, CNPC’s market value exceeded $123.6 billion. PetroChina is a Chinese state-owned enterprise.
In 2001, Chalco was listed in New York and Hong Kong, raising funds of $486 million. JPMorgan Chase was one of its stock underwriters. As of Feb. 25, 2019, the market value of Chalco exceeded $5.8 billion.
In 2002, China Telecom was listed in New York and Hong Kong, raising $1.52 billion. JPMorgan Chase was one of its underwriters. As of Feb. 25, 2019, China Telecom’s market value exceeded $45.5 billion.
In 2014, China Momo (Momo, Inc.) listed in New York, raising funds of $216 million, with JP Morgan Chase one of its lead underwriters. As of Feb. 25, 2019, the market value of Momo exceeded $6.8 billion.
The USCC stated that, as of Feb. 25, 2019, there were 156 Chinese companies (the number does not including the offshore Chinese companies listed in Hong Kong) listed on the three major stock exchanges in the United States—the New York Stock Exchange, the NASDAQ, and the American Stock Exchange—with a market value of $1.2 trillion.
Roger Robinson, the economic and financial strategist of former US President Reagan, estimated that “the U.S. has roughly $1.9 trillion invested in Chinese stocks and another trillion in bonds.”
In addition to the stock market, another major market for the CCP’s overseas financing is bonds.
Big Bond Funds
During this crucial time of the global fight against the CCP virus pandemic, JPMorgan Chase seemed to have made a big move quietly.
On Feb. 28, 2020, JPMorgan Chase included in its global emerging market government bonds index nine local Chinese government (CCP) bonds. According to the plan, the inclusion will be completed step by step within 10 months.
JPMorgan Chase announced this news in September 2019, and this time it was implemented as originally planned.
It is reported that after the inclusion, international investments that “track” the index automatically allocate Chinese bonds in proportion. Goldman Sachs calculated that this inclusion will hopefully attract $3 billion in foreign funds into the Chinese bond market every month.
Industry insiders said that after the CCP government bonds are fully included in the JP Morgan Chase Index, they can reach the weight limit of 10% of the index.
According to mainland China media reports, Bloomberg calculated that when the weight of China’s bond inclusion reaches 10%, the scale of potential foreign capital inflows to China will exceed $20 billion.
Incorporating the Chinese government’s government bonds into mainstream international bond indexes has contributed to the inflow of foreign capital into China. In February of this year, foreign ownership of Chinese bonds reached a record high.
During the Pandemic, JPMorgan Was Part of the Online Shanghai Opening Ceremony
Under the pandemic, Shanghai held an online opening ceremony for local branches of five global institutions including JPMorgan Chase, Invesco, and Russell Investment on March 20, 2020.
On Dec. 18, 2019, JPMorgan announced that the China Securities Regulatory Commission (CSRC) has approved a Securities and Futures Business Permit for JPMorgan Securities (China) Company Limited. The approval paves the way for JPMorgan’s majority-owned securities company in China to commence business operations.
Filippo Gori, CEO for JPMorgan, Asia Pacific, said in the company’s statement: “China represents one of the largest opportunities for many of our clients and is a critical component of JPMorgan’s growth plans in Asia Pacific, and globally.”
According to a report from Sina, JPMorgan has posted more than 30 career and job opportunities in China in 2020.
The business and investment of JPMorgan in China have a long history.
A Business With Deep Roots in China
The following historical information is taken from JPMorgan’s official website.
1973
Chase Chairman David Rockefeller leads a U.S. delegation to China to meet with China’s Premier Zhou Enlai. In the same year, Chase becomes the first U.S. bank to be designated as a correspondent bank for Bank of China.
1997
JPMorgan acts as a joint book runner for the People’s Republic of China’s$500 million bond issuance.
2001
JPMorgan Chairman and CEO Bill Harrison meets with China’s President Jiang Zemin in Beijing.
J.P. Morgan Chase Bank (China) Company Limited, the firm’s locally incorporated bank, is established.
JPMorgan received approval from the China Securities Regulatory Commission to enter into a joint venture futures company, known as the J.P. Morgan Futures Company Limited.
2011
JPMorgan signs the investment agreements in Beijing to establish a Sino-foreign joint venture guarantee corporation as one of the major investors.
2015
JPMorgan Chase & Co. forms a strategic partnership with Postal Savings Bank of China.
2017
JPMorgan received a Type-A Bond Settlement Agent license in China.
JPMorgan received Debt Financing Instruments of Non-financial Enterprises Underwriting License in China’s interbank bond market.
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The Close Connections Between JPMorgan and the CCP
