Bear Stearns (NYSE:BSC) and China's CITIC Securities agreed to swap $1 billion stakes in each other in a deal that opens doors for business partnerships in both the United States and the hot Chinese market. The news comes after Bear Stearns shares have been punished from a slumping mortgage market, trading nearly 30 percent off of their 2007 highs.

There has been speculation for several weeks that a large investor was going to step up and take a stake in the troubled company. Warren Buffet dispelled rumors that he was considering taking a large stake in the company last week, but many speculated that another large equity investor may get involved with the company. Many investors are disappointed because they were looking for a capital infusion, not simply a breakeven business partnership.

"We are confident that combining our operations in Asia with CITIC Securities will greatly benefit Bear Stearns' global client base and generate substantial new revenues and growth opportunities for the firm," Bear Stearns Chairman and Chief Executive James Cayne said in a statement.

The move does promise to give Bear Stearns a larger foothold in the hot Chinese market that continues to grow at a breakneck pace; however, there has been much talk recently of a bubble in the Chinese market. State-backed CITIC is the largest brokerage in China (and Asia in general) - so it is not likely to experience problems - but IPOs in China are likely to cool down. 

In the end, this is good news for Bear Stearns as it means a much-needed expansion outside of the United States and into a market that is growing extremely fast these days. Any joint ventures in Asia are likely to produce returns that should help shareholder regain confidence in a troubled BSC. Combined, these factors make BSC a stock worth watching!

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