Editor's note: Matteo Giovannini is a finance professional at ICBC in Beijing and a member of the China Task Force at the Italian Ministry of Economic Development. The article reflects the author's opinions and not necessarily the views of CGTN.

The map of global markets is changing fast. Economic, political and social forces are quickly rebalancing a traditionally Western-dominated financial services industry, creating an eastward flow of capital and talents and paving the way for the Asia Pacific region's increasing importance.

China International Capital Corporation Limited (CICC) is reportedly leading the advancement of a group of highly ambitious Chinese security firms experiencing an incredible year in equity dealmaking to the point of surpassing titans such as Goldman Sachs and Morgan Stanley. There's a chance to further increase the gap due to Ant Group's upcoming multi-billion dollar dual IPO that is expected to boost Chinese companies' presence in the global rankings even more. According to Bloomberg, Chinese security companies are expected to take nearly half of the top 50 underwriting spots, benefiting from the nation's rapid economic recovery from the novel coronavirus pandemic and from the growing wave of listing on domestic exchanges.

The growing prominence of domestic security firms, known in China as brokerages, now raises the question of whether the country is finally in the condition to create a valid player in the global investment banking market to match the same level of status, prestige and global reach of giants like Goldman Sachs. The first attempt to create a Chinese investment bank came with the establishment of the CICC in 1995, a joint venture between China Construction Bank and Morgan Stanley that pioneered implementing international best practices on the Chinese mainland. It paved the way for the subsequent creation of other important firms, such as Citic Securities, Guotai Jun'an Securities and Haitong Securities.

It has to be underlined that investment banking is a very traditional industry that relies heavily on the personal relationship between companies and investors to originate cross-border deals. It strongly depends on firms' brand recognition and the professional reputation of their top management and board of directors. In this sense, a major challenge for Chinese firms used to be the lack of an extended background, including a solid track record of transactions to present to potential clients.

However, things are changing fast due to China's rising role in global finance. China is currently the world's second equity and debt capital market. And given its recovery from COVID-19, an increased number of investors are pouring money into China's stocks, bonds and investment projects, attracted by the returns of a high benchmark interest rate. This radically changed global investment landscape is putting the country in the best condition to attract more foreign capital and make local startups rethink their IPO strategies. It also has the potential to attract the best Chinese professionals and foreign talents and advance the internationalization of the yuan and the integration of the domestic financial market with the rest of the world at the same time.

In particular, the opening-up national strategy is going to create the conditions for a major increase in the volume of cross-border transactions and create a highway for Chinese security firms to be part of the game in the investment banking arena. The China Securities Regulatory Commission's (CSRC) July decision to turn a selected batch of domestic commercial banks into "aircraft carrier-level" investment banks, offering universal banking services will enable local financial institutions to become real global players in terms of size and scale, with the opportunity to consistently increase their global market share.

One last aspect to consider is that China occupies the undisputed global leading spot in the transition from traditional finance to fintech through innovation in fields such as mobile payments, big data and artificial intelligence (AI). The country has been providing a fertile business environment that stimulates the continuous growth of a startup ecosystem that will eventually require the essential support of investment banking services in executing M&A deals and IPOs. The increased protectionism of the U.S. administration toward China also contributes to startups' preference for Chinese security firms' advisory service.

All in all, the changed post-pandemic global landscape and China's growing importance in finance seem to be finally offering the country the long-awaited golden opportunity to accomplish its goal of creating world-class investment banks that could enjoy the status of bulge bracket. 

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