Morgan Stanley
Morgan Stanley CEO James Gorman hinted last month that job cuts might be coming as senior executives assess headcount. Image Credit: Bloomberg

California: Morgan Stanley is considering cutting about 50 investment banking jobs in the Asia Pacific after dealmaking in the region plunged this year, people familiar with the matter said.

The New York-based bank plans to reduce a significant number of its China-focused banking roles, mostly from sector teams, and may involve a handful of capital markets positions, the people said, asking not to be identified because the matter is private. The cuts could start this month, they said.

The staff reductions would be among the highest for Wall Street firms in Asia, more than the roughly 30 staff let go by rival Goldman Sachs Group Inc. in September, the people said. Morgan Stanley CEO James Gorman hinted last month that job cuts might be coming as senior executives assess headcount, while Goldman Sachs CEO David Solomon recently resumed the firm’s practice of periodically culling underperformers.

A Hong Kong-based spokesperson for Morgan Stanley declined to comment.

Morgan Stanley has operated a bigger China team in Hong Kong than most of its rivals historically. The firm’s been the top arranger of Chinese stock sales in Hong Kong and the US for the past eight years, topping Goldman Sachs and UBS Group AG, data compiled by Bloomberg show. Overseas stock sales by Chinese companies are down 88 per cent from last year.

In China, Morgan Stanley has been more cautious adding headcount on the mainland and holds fewer licenses than its biggest competitors including Goldman Sachs, UBS and JPMorgan Chase & Co. This year, it’s seeking several new licenses onshore for futures and research, as well as hiring a head of onshore equities.

Reductions elsewhere

Goldman’s reductions came after the firm went on an unprecedented hiring spree in China and Hong Kong last year as the world’s second-biggest economy opened its financial market fully to foreign brokerages and asset managers. UBS and Credit Suisse Group AG have also done a round of staff cuts in recent months.

Meantime, Tiger Global Management has pulled back from China and is pausing future stock investments. The long-time investor in the region has been reducing exposure to the country this year in its hedge and long-only funds.

Still, executives at firms from Carlyle Group Inc. to HSBC Holdings Plc say China’s future remains intact as a favorable investment destination. William Conway, the co-founder of private equity giant Carlyle, this week told a summit in Hong Kong that “it’s very hard to bet against China,” particularly for people with a long-term view. HSBC CEO Noel Quinn said he was upbeat on China in an interview with Bloomberg TV Wednesday.