Goldman Sachs has regained its position as the revenue leader among major investment banks operating in China, signaling a recovery for Wall Street firms in the country's securities market. This rebound, however, is not evenly distributed, with Goldman excelling in generating current business while Shengang Securities maintains the largest asset base. The firm's return to the top reflects the value of its global platform, connecting Chinese clients to international capital markets, and its ability to adapt to a market where opportunities are narrower, focusing on areas like equity underwriting, institutional brokerage, asset management, and advisory work.
This profit surge comes despite market polarization, where global reach, domestic licenses, and balance sheet strength are crucial for success. China's financial opening is creating a tougher hierarchy, rewarding stronger firms with more business and leaving weaker players to compete for thinner fees. The recovery remains uneven across the broader Chinese economy, with sectors like technology and advanced manufacturing attracting support, while property and local government finance continue to pose challenges, directly impacting the securities business.
In a related development, US banks, spearheaded by Goldman Sachs, have borrowed a record Rmb$300 billion ($44 billion) in renminbi this year through "dim sum bonds" issued outside mainland China, primarily in Hong Kong. This represents more than double the amount borrowed at this point in 2025. Goldman alone has accounted for Rmb$32.1 billion, or about 10%, of this issuance, making it the largest foreign issuer of these bonds and second overall only to Bank of China.
This surge in renminbi borrowing is driven by low interest rates in China and high demand from yield-hungry mainland Chinese investors seeking higher-yielding products, particularly as Beijing facilitates access to Hong Kong's fixed-income market. Economists suggest this trend indicates the renminbi is taking on a role previously held by the Japanese yen as a major funding currency, especially given rising borrowing costs in Japan. Despite the "borrowing frenzy," Goldman Sachs confirmed that the funds raised are not for its mainland operations but can be deployed across the firm, and currency risks are hedged.
Separately, global banks, including top US lenders, are projected to see a 10% gain in markets revenue for 2025, reaching $246.2 billion, the best since 2009. This is propelled by increased trading activity due to volatility from shifting US tariff policies. For the first half, a 13% gain is projected, with equities revenues potentially rising 18% in the second quarter and bond revenues climbing 5% year-over-year. This indicates that providing liquidity in volatile markets is benefiting those in the market-making business.
