Morgan Stanley and Chinese Wealth Fund Talk
"German Engineering, Swiss innovation, American nothing."
Advertising slogan used on a billboard in South Africa by Daimler to promote its smart "forfour" compact car.
Flashback to 1998 (less than 10 years ago). Who would have thought that Asia's ravaged economies would now be in a position to "rescue" some of the developed world's most famous financial institutions? If I told you that a Chinese organization would buy-in and potentially buy-out out a blue-chip U.S. investment bank many would have laughed in my face!
But the F.T. reports that China Investment Corporation,the US$200 billion sovereign wealth fund, which already owns just under 10% of Morgan Stanley is now in discussions with the bank for a further increase in participation. Interestingly, the private equity shop, J.W. Flowers which was famous for the creation and IPO listing of Shinsei Bank in Japan runs a fund with over US$3 billion of CIC money focusing on financial institutions and might be included in some way in talks if a full-fledged takeover were in the cards.
In normal times this kind of activity would almost certainly become a political hot-button. Funny how the media and politicians are now suddenly quiet!
What appears clear is that China, Singapore, Korea and potentially Japan all have currently well-capitalized SWFs and are now becoming more "international" in their ambitions. This can be good, for the survival of developed world assets in the short run but can also lead to other kinds of dependencies down the road. Globalization can flow both ways.
For example, there is now an even bigger reason why any forecast global slowdown cannot be allowed to infect the emerging markets heading into 2009. If as a result, these SWFs are forced to ultimately withdraw their support and financing for the U.S. financial system either directly or indirectly due to harsh domestic conditions at home (including civil unrest) then the current credit crisis might seem like a tea party. Be careful what you wish for!
Onb the bright side, at least the heads of some of these i-banks might at last become truely internationally-focused. They certainly only were in talk in the past. Expect their boards to include foreigners and even the CEOs of U.S. blue-chip investment banks to be ABC (American Born Chinese). Makes sense to me. Move overAnglo-Saxon stereotypes... the global leaders of tomorrows financial institutions are coming from a developing country near you (with money to prop up your bank).
Expect CIC to step up and buy more of any Morgan Stanley offerings. The prescendent is there. The only real issue is probably the price and most certainly this is where the real horse-trading will happen. Mahalo.
"German Engineering, Swiss innovation, American nothing."
Advertising slogan used on a billboard in South Africa by Daimler to promote its smart "forfour" compact car.
Flashback to 1998 (less than 10 years ago). Who would have thought that Asia's ravaged economies would now be in a position to "rescue" some of the developed world's most famous financial institutions? If I told you that a Chinese organization would buy-in and potentially buy-out out a blue-chip U.S. investment bank many would have laughed in my face!
But the F.T. reports that China Investment Corporation,the US$200 billion sovereign wealth fund, which already owns just under 10% of Morgan Stanley is now in discussions with the bank for a further increase in participation. Interestingly, the private equity shop, J.W. Flowers which was famous for the creation and IPO listing of Shinsei Bank in Japan runs a fund with over US$3 billion of CIC money focusing on financial institutions and might be included in some way in talks if a full-fledged takeover were in the cards.
In normal times this kind of activity would almost certainly become a political hot-button. Funny how the media and politicians are now suddenly quiet!
What appears clear is that China, Singapore, Korea and potentially Japan all have currently well-capitalized SWFs and are now becoming more "international" in their ambitions. This can be good, for the survival of developed world assets in the short run but can also lead to other kinds of dependencies down the road. Globalization can flow both ways.
For example, there is now an even bigger reason why any forecast global slowdown cannot be allowed to infect the emerging markets heading into 2009. If as a result, these SWFs are forced to ultimately withdraw their support and financing for the U.S. financial system either directly or indirectly due to harsh domestic conditions at home (including civil unrest) then the current credit crisis might seem like a tea party. Be careful what you wish for!
Onb the bright side, at least the heads of some of these i-banks might at last become truely internationally-focused. They certainly only were in talk in the past. Expect their boards to include foreigners and even the CEOs of U.S. blue-chip investment banks to be ABC (American Born Chinese). Makes sense to me. Move overAnglo-Saxon stereotypes... the global leaders of tomorrows financial institutions are coming from a developing country near you (with money to prop up your bank).
Expect CIC to step up and buy more of any Morgan Stanley offerings. The prescendent is there. The only real issue is probably the price and most certainly this is where the real horse-trading will happen. Mahalo.
posted by Franklin Scruggins | 5:17 AM
1 Comments:
Well, Citi already has Vikram Pandit...
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