Baltimore Sun- Bear Stearns Cos. and a Chinese government-controlled securities firm agreed yesterday to invest $1 billion in each other and combine some operations in Asia, giving the U.S.brokerage an entrance into China’s insular financial sector.
The investment is the biggest of its kind between a U.S. and Chinese financial institution, and highlights China’s increasing strength in global financial markets. For Bear Stearns, battered this summer by the slumping mortgage markets, the pact with Citic Securities Co. Ltd. positions it as a major player in one of the world’s fastest-growing economies.
Bear Stearns trails U.S. rivals in China, where it has struggled to build a business since opening a Beijing office in 1992.
The company has fallen as much as 37 percent this year in New York trading, beset by the collapse of the U.S. subprime mortgage market.
Surging defaults on mortgages to homebuyers with poor credit histories pushed two of the firm’s hedge funds into bankruptcy and eroded its fixed-income revenue.
