It hasn’t been a great few months for jobs at US investment banks in Asia: Goldman Sachs cut bankers in late 2016, as did Bank of America.
Morgan Stanley, however, is looking to add senior investment bankers in China and Hong Kong after Chinese New Year, according to two headhunters who work with the firm. This follows the news last week that Morgan Stanley promoted three Hong Kong-based investment bankers to managing director rank.
This hiring is likely to be small scale and concentrated on rainmakers in ECM and M&A, says one of the headhunters. In those sectors, the bank came third and sixth respectively in the ex-Japan APAC revenue tables last year, according to Dealogic.
“Morgan Stanley in Asia is a powerhouse in M&A and ECM,” says former Deutsche and UBS banker Benjamin Quinlan, now CEO of Hong Kong consultancy Quinlan & Associates. “Its strength is its cross-border business, especially helping US clients invest into Asia and Asian ones into the US."
Morgan Stanley is also set to raise its stake in its Chinese joint venture to 49%, the maximum threshold under current mainland regulations. Western banks are hoping that China eventually follows through with proposals to allow majority ownership.
“This signals a strong commitment to the China onshore market. And as a result, MS could now be looking to build out its China platform with a full suite of licences in anticipation of gaining total control one day,” says Quinlan.
Meanwhile, Morgan Stanley’s Asian equities traders also have cause for optimism.
When CEO James Gorman gave his Q4 2016 earnings conference call on Tuesday, his presentation slides highlighted building the Asia franchise as one of the bank’s “sales and trading strategic priorities”.
“In addition, we remain committed to investing our Asia franchise as we expect a positive long-term secular trend of increasing activity and improving liquidity in the region,” Gorman said on the call. “While the equity sales and trading landscape remains competitive, the shifting dynamics may benefit the leading players.”
“He means that the competitive dynamics in Asian equities are changing,” explains Quinlan. “Smaller tier-two players like Standard Chartered and Barclays have been pushed out of the market, which is opening up opportunities for top-tier players like MS to step in. The largest banks with the greatest access to liquidity will benefit the most in this new environment.”
“There’s also a shifting client base for banks in Asian equities towards hedge funds and Asian asset managers,” he adds. “That will benefit Morgan Stanley because of its strong onshore Asia presence and its strength in the hedge fund space.”
While this positive outlook should make existing Morgan Stanley traders in Asia less vulnerable to losing their jobs, it may not generate new recruitment in the coming months.
The bank will instead cement its position as a “strong electronic trading house” in Asia, says Nick Wells, managing partner at quantitative trading search firm Newton Chase. “Shifting trade flows from high-touch to low-touch will benefit its algo business,” adds Quinlan.
Morgan Stanley may look to recruit more equity researchers, however. “Any hiring is likely to be China-focused. China A-share research coverage out of Hong Kong has been a priority for most banks, and MS now covers somewhere north of 150 Chinese stocks, up from less than 10 two years ago,” says Quinlan.
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