Morgan Stanley’s investment bankers in Asia may now be casting an envious eye at their colleagues in wealth management. The US bank’s Q2 Asian revenues fell 2% compared with a year ago, and 10% quarter on quarter, according to its financial results.
Morgan Stanley doesn’t explain the reasons for its performance in Asia, but it’s likely that a fall in M&A revenue played a part in the overall regional decline. Globally, M&A advisory income was down 18% year on year in Q2. While there are no specific figures for Asia in the firm’s earnings report, Dealogic first-half data shows that year on year MS fell from the second to third spot for ex-Japan Asia M&A revenue.
In debt capital markets (DCM), which suffered a 22% global decline in Q2, Morgan Stanley doesn’t even appear in Dealogic’s Asian revenue top-10, a list increasingly dominated by Chinese banks. In equity capital markets (ECM), revenue inched up 1% across MS, and the bank topped the regional league table, with $109m in revenues for H1.
The US bank may not dominate Asian ECM in Q3, however. Last week Morgan Stanley lost its cut of what would have been the year’s biggest initial public offering when Anheuser-Busch InBev’s Asia Pacific unit pulled out of a proposed listing that was expected to raise $9.8bn. Reuters described the deal falling through as a hit to Morgan Stanley’s “wallet and credibility”.
Despite Morgan Stanley’s moderate Q2 results in Asia, there are some signs of expansion on the horizon for its investment bank. In a strategic update published in the first quarter, CEO James Gorman highlighted several “growth initiatives” in the region. For example, Morgan Stanley is expanding its coverage of four “new economy” sectors: consumer, IT, media and entertainment, and healthcare. It’s also prioritising cross-border financing in Asia, and is committed to taking a majority stake in its mainland China securities joint venture.
If you want to work for the most expansionist unit at Morgan Stanley in Asia, however, wealth management – not investment banking – is probably your best bet. Revenues in the division were up 2% globally in Q2. While Morgan Stanley is already one of the largest wealth managers in the US, the firm sees room for growth in Asia, where it is a medium-sized player, ranked fifth by regional assets under management in 2018 ($105bn). “That’s where I’d like to invest – Hong Kong, Singapore – go hard at it,” CEO Gorman told a conference in New York last month, referring to private banking.
Vincent Chui, Morgan Stanley’s head of wealth management in Asia, said earlier this year that the bank plans to take on 50 relationship managers in Hong Kong and Singapore over the next three years. It currently employs about 315 RMs across Asia and focuses exclusively on ultra-high-net-worth clients. In Singapore, Morgan Stanley is hiring RMs to look after the wealthy Chinese entrepreneurs who are increasingly setting up offshore family offices.
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