Friday 19 September 2008

Morgan Stanley may sell 49 pct stake to China sovereign wealth fund

Morgan Stanley is in talks to sell a stake of up to 49 pct to China’s sovereign wealth fund in an effort to ensure its survival and reverse a slump in investor confidence, the Financial Times reported.
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Guanyu said...

Morgan Stanley may sell 49 pct stake to China sovereign wealth fund – report

BEIJING (XFN-ASIA) - Morgan Stanley is in talks to sell a stake of up to 49 pct to China’s sovereign wealth fund in an effort to ensure its survival and reverse a slump in investor confidence, the Financial Times reported.

Citing people close to the discussions, the newspaper said Morgan Stanley’s top management preferred to sell a stake to China Investment Corp (CIC) to merging with Wachovia, which approached Morgan Stanley on Wednesday.

CIC already has a 9.9 pct stake in Morgan Stanley.

The newspaper said Morgan Stanley’s talks with CIC were advanced but a deal has not yet been clinched.

Morgan Stanley’s shares have been hammered on concerns over its ability to survive in the current financial meltdown, but an investment by CIC – which was given 200 bln usd by the Chinese government last year - could help restore investors’ faith in the business, the newspaper noted.

With CIC backing, Morgan Stanley executives hope the investment bank would have adequate resources to survive the current turmoil.

Still, the newspaper added that the sale of large stake in a blue-chip Wall Street firm to a Chinese state-owned entity could cause a political backlash in Washington, especially as there is the alternative of an all-American merger with Wachovia.