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The U.S.-China trade war won't have a negative impact on this business

Julie Hyman
Reporter

The U.S.-China trade war may be worrying executives in sectors from semiconductors to shoes, but one financial services chief is not concerned.

In January, S&P Global was given a license to open a ratings agency in China, becoming the first financial oriented firm that has a 100% ownership in an operation in China. And the company’s CEO, Doug Peterson, says S&P’s license isn’t in jeopardy as a result of the breakdown in trade negotiations between the two nations.

“Quite the contrary,” Peterson said in an interview with Yahoo Finance’s On the Move. “There is a lot of enthusiasm for our licensed rating agency on the ground.”

The onshore Chinese bond market is valued at more than $10 trillion, according to the International Monetary Fund, and only 2% of that market is currently owned by foreigners. China is hoping to change that, Peterson said.

“The Chinese know that they want to have a more sophisticated financial sector where you've got typical institutional investors — pension funds, insurance companies, wealth, and they want to see international investors coming to the market,” he said.

S&P Global has 31 Mandarin-speaking analysts covering 40 different sectors in the Chinese market, Peterson said on the company’s first-quarter earnings call on May 2.

The company made about 45% of its revenue from the ratings business in 2018, according to Bloomberg, with about 10% of overall revenue coming from Asia.

On the call, Peterson said 2019 is an investment year for the China ratings business. Wall Street analysts estimate that overall foreign money flowing into the country’s bond market will surge in the coming years, particularly in the wake of Chinese bonds being added to the benchmark Bloomberg Barclays Aggregate Bond Index on April 1.

Julie Hyman is co-anchor of Yahoo Finance On the Move.

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