Morgan Stanley plans China research expansion

The US investment bank will beef up its team along with an increase of its A-share coverage.

Morgan Stanley is beefing up its China research team to meet the increasing need for coverage of A-shares and the Greater China markets.

The US investment bank will hire up to 20 associates and some vice president-level analysts in a mix of sectors, according to an internal email seen by FinanceAsia. However, no specific sector was mentioned.

Meanwhile, Morgan Stanley will expand its A-share coverage by 50% to 100% in the next 18 months, the memo said. It currently covers more than 300 A-share and H-share stocks.

There are 40 to 50 people in the China team, according to one source close to the company.

The hiring plan comes as China’s A-share market is becoming an increasing focus for global investors.

Shanghai’s stock market has surged 31% and trading volume 10% since the launch of Shanghai-Hong Kong Stock Connect Scheme on November 17, a programme allowing foreign investors to buy A-shares directly and vice-versa.

The existing research team does not have enough people with sufficient knowledge of certain A-share listed companies that Morgan Stanley may later include in its research coverage, according to a source close to the company.

However, among the new positions, “there will be no separation of individuals covering A-shares versus non A-shares,” the memo said.

The expansion plan also comes as smaller global banks shrink their equities businesses in Asia due to intense competition. In January, Standard Chartered shut down its global equities business and CLSA let go more than 20 people from its equities unit.

Morgan Stanley’s move confirms its commitment to China business. Last year, the bank ranked top one among global banks in both China investment banking business and China equities capital market in terms of net revenue, according to Dealogic data.

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