Morgan Stanley on Wednesday said it had sold a $5bn stake to China’s new sovereign wealth fund and revealed that a total of $9.4bn in mortgage-related writedowns had driven it to a fourth-quarter loss, leading its chief executive John Mack to forgo his bonus for 2007.
The bank said it had been forced to write off a further $5.7bn, on top of a previously announced $3.7bn charge already taken on its holdings of troubled structured credit products in the quarter.
The deepening problems in the credit markets helped drive Morgan Stanley to a net loss of $3.59bn, or $3.61 a share, compared with a profit of $1.54bn a year ago. The company said it had negative revenue of $450m, down from $7.85bn a year earlier. Analysts had expected 39 cents of loss on positive revenues of $4.23bn.
The writedowns came because of “continued deterioration and lack of liquidity in the market for subprime and other mortgage related securities since August 2007”, it said.
Mr Mack added: “The writedown Morgan Stanley took this quarter is deeply disappointing. Ultimately, accountability for our results rests with me, so I’ve told our compensation committee that I will not accept a bonus for 2007.” Last year Mr Mack was awarded $40m in restricted stock and options.
He said the writedown stemmed from “losses by a small trading team in one part of the firm”.
In order to “bolster” its capital position, the bank said it would issue about $5bn in new capital with mandatory conversion into stock to China Investment Corporation, a $200bn fund. In return CIC will be able to convert the investment into a stake of up to 9.9 per cent, but will remain a passive investor, with no role in managing the company.
CIC’s investment is the latest in a series of stake-building moves in Wall Street firms by Chinese groups. In June CIC bought a $3bn stake in Blackstone Group during the private-equity firm’s initial public offering, while Bear Stearns in October agreed a deal with Citic Securities, China’s largest listed brokerage, that will see the two groups invest $1bn in each other.
Among other significant foreign investments, Citigroup said last month it had taken a $7.5bn capital infusion from a fund owned by the Abu Dhabi government to shore up its capital after $11bn in writedowns on mortgage investments.
Morgan Stanley said that $7.8bn of its losses came from subprime trading positions. It also had $1.2bn of writedowns related to European non-conforming loans, commercial mortgage backed securities, alt-A mortgages and other loans.
The bank said that at the end of the quarter on November 30 it had $1.8bn in exposure to subprime, down from $10.4bn in August.
Losses in its fixed income unit from the bets on the mortgage markets that went wrong were partially offset by stronger revenues from its equity trading segment, and higher fees in its investment banking advisory and wealth management services.
Shares in Morgan Stanley rose 0.25 per cent to $48.19 in pre market trading.
Dec. 19 (Bloomberg) -- Morgan Stanley reported a steeper- than-forecast loss after $9.4 billion of writedowns on mortgage- related holdings and received a $5 billion cash infusion from state-controlled China Investment Corp.
John Mack, chief executive officer of the second-largest U.S. securities firm, called the $3.56 billion fourth-quarter loss “deeply disappointing” and will forgo a bonus for the year, the company said today in a statement. Morgan Stanley rose 1.5 percent to $48.79 at 9:45 a.m. in New York Stock Exchange composite trading.
Mack’s strategy of expanding in mortgages and making bigger trading bets backfired as losses from securities linked to home loans more than doubled in November. He ousted Co-President Zoe Cruz, who had overseen the fixed-income unit responsible for the mortgage trades, last month and promoted James Gorman and Walid Chammah, who previously ran wealth management and the New York- based firm’s European operations.
“There was a huge risk management failure here,” said Steve Roukis, who helps oversee $1.8 billion at Matrix Asset Advisors Inc. in New York, including Morgan Stanley shares. “You’re going to see a broad undertaking by the Street to have more diversification and more hedging of all positions.”
The loss of $3.61 a share in the three months ended Nov. 30 compares with net income of $1.98 billion, or $1.87, a year earlier. Analysts were estimating a loss of 39 cents, according to a survey by Bloomberg. The loss was the first since the company went public in 1986.
Cash Infusions
Morgan Stanley joined competitors including Merrill Lynch & Co., Citigroup Inc., Bear Stearns Cos. and Zurich-based UBS AG in booking losses on investments in securities, such as collateralized debt obligations, that contain subprime home loans.
Citigroup and UBS also received cash infusions from outside investors to shore up capital. Bear Stearns sold a six percent stake to China’s government-controlled Citic Securities Co. for $1 billion in October. Bear Stearns said it would invest the same amount in Citic.
China Investment, the nation’s sovereign wealth fund, will acquire as much as 9.9 percent of Morgan Stanley, making it the company’s second-largest shareholder after Boston-based State Street Corp., according to data compiled by Bloomberg. The fund is buying securities that convert into Morgan Stanley shares and pay annual interest of 9 percent. China Investment won’t get a seat on the board or play a role in management, Morgan Stanley said in the statement.
‘Pay for Performance’
For the full year, Morgan Stanley’s revenue fell 6 percent to $28 billion from $29.8 billion and net income decreased 60 percent to $2.56 billion.
Return on equity, a measure of how effectively the firm reinvests earnings, dropped to 7.8 percent from 23.8 percent in 2006. Goldman Sachs Group Inc., which reported a record profit yesterday, said its return on equity was 32.7 percent in 2007.
“Accountability for our results rests with me,” Mack said in the statement. “I believe in pay for performance, so I’ve told our compensation committee that I will not accept a bonus for 2007.”
Mack reaped a $40 million bonus in 2006, the biggest ever paid to a Morgan Stanley CEO.
Morgan Stanley is the third of Wall Street’s largest firms to post results for the fiscal quarter that ended Nov. 30. Lehman Brothers Holdings Inc., the fourth-biggest by market value, reported last week that profit dropped 12 percent, the second consecutive decline, and said losses from the collapse of the subprime mortgage market will probably extend into next year.
Subprime Fallout
Goldman, the biggest U.S. securities firm, reported fourth- quarter earnings yesterday of $3.22 billion on higher revenue from investment banking, stock trading and gains from selling power plants.
Morgan Stanley said its fixed income sales and trading group recorded a net loss of $7.9 billion in the fourth quarter, after the writedowns, which included $7.8 billion for subprime- related losses. The remainder stemmed from a decline in the value of loans, commercial mortgage-backed securities, and so- called Alt-A mortgage securities.
“Our assumptions included what at the time was deemed to be a worst-case scenario,” said Colm Kelleher, the firm’s chief financial officer, in a phone interview today. “History has proven that that worst-case scenario was not the worst case.”
Kelleher said conditions in the credit markets “clearly got worse” after September.
Credit Drag
“The credit environment remains challenged, it will take several quarters to return to more normal markets,” he said. “Credit is going to be a drag on the fixed-income business going forward for the next few quarters.”
Equity sales and trading revenue climbed 72 percent to $2.5 billion and investment banking revenue rose 4 percent to almost $1.6 billion.
Revenue at the global wealth management unit, still overseen by Gorman, increased 23 percent to $1.8 billion and pretax profit advanced 124 percent to $378 million. Asset management, run by Owen Thomas, reported a 9.7 percent gain in pretax profit, to $294 million.
Morgan Stanley dropped 29 percent this year in New York Stock Exchange composite trading through yesterday, the worst annual decline since 2001.
The company ranks second after Goldman among the world’s biggest advisers on mergers and acquisitions announced in 2007, data compiled by Bloomberg show. The firm advised on $42.2 billion of takeovers completed during the fiscal fourth quarter, more than double a year earlier.
‘Increasing Caution’
Kelleher said the firm’s pipeline of merger assignments was unchanged from the previous two quarters.
“We are seeing increasing caution” in conversations with the firm’s investment-banking clients, he said.
In equity underwriting, Morgan Stanley managed $14.1 billion of offerings during the quarter, up from $13.6 billion a year earlier, Bloomberg data show.
Morgan Stanley said in October that it was eliminating 900 jobs, mostly in the mortgage units. The firm said Nov. 7 that investments in subprime mortgages and related securities lost $3.7 billion of value in September and October.
“Conditions have deteriorated,” said William Fitzpatrick, who helps oversee $1.7 billion, including Morgan Stanley shares, as a financial-services analyst at Optique Capital Management in Racine, Wisconsin. “It’s going to get worse before it gets better.”
Zombie = 大弟子 (Kateks Die Pain! Pain!) Guanyu = 二弟子 (I call a spade a spade. I call a short seller a short seller, a long buyer a long buyer. No katek or panjiang)
China Doubles Subsidies for Pig Farmers in Bid to End Meat Shortage, Cool Inflation
BEIJING (AP) -- China is promising to double subsidies for pig farmers to boost pork production and cool an inflation surge blamed on food shortages, a state news agency reported Thursday.
The announcement adds to a string of efforts to end shortages of pork -- China's staple meat -- and other basic items that pushed food price inflation in November to a monthly rate of 18.2 percent.
The Cabinet agreed Wednesday to pay farmers a subsidy of 100 yuan ($13) for each fertile sow next year, double this year's rate, the Xinhua News Agency said.
The move is meant to "ensure adequate market supply and stabilize food prices," Xinhua said.
The Cabinet also promised to spend 2.5 billion yuan ($300 million) next year to help breeders build "standardized, large-scale" pig farms, the report said.
China's pork production fell sharply this summer due to high feed costs and an outbreak of blue-ear disease that prompted the government to destroy thousands of animals.
Beijing earlier promised pig farmers free vaccinations and other aid, and ordered banks to extend them credit.
Other measures announced Wednesday included ending rebates of export taxes on wheat, corn and other grains. The step appeared to be intended to push Chinese producers to sell more of their output at home, reducing pressure on prices.
The government plans to release part of its corn reserves onto the market to curb rising prices, Xinhua said.
6 comments:
Morgan Stanley on Wednesday said it had sold a $5bn stake to China’s new sovereign wealth fund and revealed that a total of $9.4bn in mortgage-related writedowns had driven it to a fourth-quarter loss, leading its chief executive John Mack to forgo his bonus for 2007.
The bank said it had been forced to write off a further $5.7bn, on top of a previously announced $3.7bn charge already taken on its holdings of troubled structured credit products in the quarter.
The deepening problems in the credit markets helped drive Morgan Stanley to a net loss of $3.59bn, or $3.61 a share, compared with a profit of $1.54bn a year ago. The company said it had negative revenue of $450m, down from $7.85bn a year earlier. Analysts had expected 39 cents of loss on positive revenues of $4.23bn.
The writedowns came because of “continued deterioration and lack of liquidity in the market for subprime and other mortgage related securities since August 2007”, it said.
Mr Mack added: “The writedown Morgan Stanley took this quarter is deeply disappointing. Ultimately, accountability for our results rests with me, so I’ve told our compensation committee that I will not accept a bonus for 2007.” Last year Mr Mack was awarded $40m in restricted stock and options.
He said the writedown stemmed from “losses by a small trading team in one part of the firm”.
In order to “bolster” its capital position, the bank said it would issue about $5bn in new capital with mandatory conversion into stock to China Investment Corporation, a $200bn fund. In return CIC will be able to convert the investment into a stake of up to 9.9 per cent, but will remain a passive investor, with no role in managing the company.
CIC’s investment is the latest in a series of stake-building moves in Wall Street firms by Chinese groups. In June CIC bought a $3bn stake in Blackstone Group during the private-equity firm’s initial public offering, while Bear Stearns in October agreed a deal with Citic Securities, China’s largest listed brokerage, that will see the two groups invest $1bn in each other.
Among other significant foreign investments, Citigroup said last month it had taken a $7.5bn capital infusion from a fund owned by the Abu Dhabi government to shore up its capital after $11bn in writedowns on mortgage investments.
Morgan Stanley said that $7.8bn of its losses came from subprime trading positions. It also had $1.2bn of writedowns related to European non-conforming loans, commercial mortgage backed securities, alt-A mortgages and other loans.
The bank said that at the end of the quarter on November 30 it had $1.8bn in exposure to subprime, down from $10.4bn in August.
Losses in its fixed income unit from the bets on the mortgage markets that went wrong were partially offset by stronger revenues from its equity trading segment, and higher fees in its investment banking advisory and wealth management services.
Shares in Morgan Stanley rose 0.25 per cent to $48.19 in pre market trading.
Morgan Stanley Posts Loss, Sells Stake to China
Dec. 19 (Bloomberg) -- Morgan Stanley reported a steeper- than-forecast loss after $9.4 billion of writedowns on mortgage- related holdings and received a $5 billion cash infusion from state-controlled China Investment Corp.
John Mack, chief executive officer of the second-largest U.S. securities firm, called the $3.56 billion fourth-quarter loss “deeply disappointing” and will forgo a bonus for the year, the company said today in a statement. Morgan Stanley rose 1.5 percent to $48.79 at 9:45 a.m. in New York Stock Exchange composite trading.
Mack’s strategy of expanding in mortgages and making bigger trading bets backfired as losses from securities linked to home loans more than doubled in November. He ousted Co-President Zoe Cruz, who had overseen the fixed-income unit responsible for the mortgage trades, last month and promoted James Gorman and Walid Chammah, who previously ran wealth management and the New York- based firm’s European operations.
“There was a huge risk management failure here,” said Steve Roukis, who helps oversee $1.8 billion at Matrix Asset Advisors Inc. in New York, including Morgan Stanley shares. “You’re going to see a broad undertaking by the Street to have more diversification and more hedging of all positions.”
The loss of $3.61 a share in the three months ended Nov. 30 compares with net income of $1.98 billion, or $1.87, a year earlier. Analysts were estimating a loss of 39 cents, according to a survey by Bloomberg. The loss was the first since the company went public in 1986.
Cash Infusions
Morgan Stanley joined competitors including Merrill Lynch & Co., Citigroup Inc., Bear Stearns Cos. and Zurich-based UBS AG in booking losses on investments in securities, such as collateralized debt obligations, that contain subprime home loans.
Citigroup and UBS also received cash infusions from outside investors to shore up capital. Bear Stearns sold a six percent stake to China’s government-controlled Citic Securities Co. for $1 billion in October. Bear Stearns said it would invest the same amount in Citic.
China Investment, the nation’s sovereign wealth fund, will acquire as much as 9.9 percent of Morgan Stanley, making it the company’s second-largest shareholder after Boston-based State Street Corp., according to data compiled by Bloomberg. The fund is buying securities that convert into Morgan Stanley shares and pay annual interest of 9 percent. China Investment won’t get a seat on the board or play a role in management, Morgan Stanley said in the statement.
‘Pay for Performance’
For the full year, Morgan Stanley’s revenue fell 6 percent to $28 billion from $29.8 billion and net income decreased 60 percent to $2.56 billion.
Return on equity, a measure of how effectively the firm reinvests earnings, dropped to 7.8 percent from 23.8 percent in 2006. Goldman Sachs Group Inc., which reported a record profit yesterday, said its return on equity was 32.7 percent in 2007.
“Accountability for our results rests with me,” Mack said in the statement. “I believe in pay for performance, so I’ve told our compensation committee that I will not accept a bonus for 2007.”
Mack reaped a $40 million bonus in 2006, the biggest ever paid to a Morgan Stanley CEO.
Morgan Stanley is the third of Wall Street’s largest firms to post results for the fiscal quarter that ended Nov. 30. Lehman Brothers Holdings Inc., the fourth-biggest by market value, reported last week that profit dropped 12 percent, the second consecutive decline, and said losses from the collapse of the subprime mortgage market will probably extend into next year.
Subprime Fallout
Goldman, the biggest U.S. securities firm, reported fourth- quarter earnings yesterday of $3.22 billion on higher revenue from investment banking, stock trading and gains from selling power plants.
Morgan Stanley said its fixed income sales and trading group recorded a net loss of $7.9 billion in the fourth quarter, after the writedowns, which included $7.8 billion for subprime- related losses. The remainder stemmed from a decline in the value of loans, commercial mortgage-backed securities, and so- called Alt-A mortgage securities.
“Our assumptions included what at the time was deemed to be a worst-case scenario,” said Colm Kelleher, the firm’s chief financial officer, in a phone interview today. “History has proven that that worst-case scenario was not the worst case.”
Kelleher said conditions in the credit markets “clearly got worse” after September.
Credit Drag
“The credit environment remains challenged, it will take several quarters to return to more normal markets,” he said. “Credit is going to be a drag on the fixed-income business going forward for the next few quarters.”
Equity sales and trading revenue climbed 72 percent to $2.5 billion and investment banking revenue rose 4 percent to almost $1.6 billion.
Revenue at the global wealth management unit, still overseen by Gorman, increased 23 percent to $1.8 billion and pretax profit advanced 124 percent to $378 million. Asset management, run by Owen Thomas, reported a 9.7 percent gain in pretax profit, to $294 million.
Morgan Stanley dropped 29 percent this year in New York Stock Exchange composite trading through yesterday, the worst annual decline since 2001.
The company ranks second after Goldman among the world’s biggest advisers on mergers and acquisitions announced in 2007, data compiled by Bloomberg show. The firm advised on $42.2 billion of takeovers completed during the fiscal fourth quarter, more than double a year earlier.
‘Increasing Caution’
Kelleher said the firm’s pipeline of merger assignments was unchanged from the previous two quarters.
“We are seeing increasing caution” in conversations with the firm’s investment-banking clients, he said.
In equity underwriting, Morgan Stanley managed $14.1 billion of offerings during the quarter, up from $13.6 billion a year earlier, Bloomberg data show.
Morgan Stanley said in October that it was eliminating 900 jobs, mostly in the mortgage units. The firm said Nov. 7 that investments in subprime mortgages and related securities lost $3.7 billion of value in September and October.
“Conditions have deteriorated,” said William Fitzpatrick, who helps oversee $1.7 billion, including Morgan Stanley shares, as a financial-services analyst at Optique Capital Management in Racine, Wisconsin. “It’s going to get worse before it gets better.”
一个有趣的故事：
一位德高望重的高僧，派他的两个高徒去做两个寺庙的主持。大弟子聪明、灵活、圆滑，主持山上的寺庙。二弟子本分，踏实、敬业，主持山下的寺庙。一段时间过后，大弟子主持的山上寺庙，香火旺盛。二弟子主持的山下寺庙，却清淡很多。二弟子不解，于是上山去向师兄请教。师兄说：“你先抽个签吧。”师弟照办抽了签，是上上签。师兄说“你再抽一个。”还是上上签。再抽第三个还是上上签。师弟将签全部倒出来，发现全是上上签！师弟明白了，他望着师兄，师兄笑而不答。
师兄主持的寺庙香火旺盛，那是因为师兄知道人们精神上需要什么，故投其所好。
If :
Zombie = 大弟子 (Kateks Die Pain! Pain!)
Guanyu = 二弟子 (I call a spade a spade. I call a short seller a short seller, a long buyer a long buyer. No katek or panjiang)
PC：“如果我有什么疑难问题，我会到那师弟主持的寺庙去烧香拜佛的。”^_^
2007-12-19
中国联通(600050), China Unicom (0762.HK)
中国联通19日收盘价格报10.42元，较上一交易日上涨6.76%。目前还未能证实今日（19日）股价上涨原因是因为国外私幕基金介入所致。同日，中国联通(0762.HK)今日收报15.95港元，上涨6.27%，大幅跑赢同类中资电讯股。瑞银维持对联通的买入评级，目标价则调升16.6%，至20.4港元，以反映增值服务带来的动力。
据媒体19日消息，从中国通信标准化协会获悉，信产部于日前发布了《点对点多媒体消息业务网间互通设备技术要求》等25项推荐性通信行业标准，从2008年3月1日起开始施行。
根据中国通信标准化协会网站的资料显示，该25项标准中的20项标准内容都与TD-SCDMA的HSDPA技术有关，还有2项标准内容涉及到另外两种3G标准WCDMA和CDMA2000。 同时有消息称，广州3G网最快将于下月商用，全国TD试验网已完成80%。
分析人士认为，上述消息是刺激中国联通股价上涨的主要原因。
20 December 2007
China Doubles Subsidies for Pig Farmers in Bid to End Meat Shortage, Cool Inflation
BEIJING (AP) -- China is promising to double subsidies for pig farmers to boost pork production and cool an inflation surge blamed on food shortages, a state news agency reported Thursday.
The announcement adds to a string of efforts to end shortages of pork -- China's staple meat -- and other basic items that pushed food price inflation in November to a monthly rate of 18.2 percent.
The Cabinet agreed Wednesday to pay farmers a subsidy of 100 yuan ($13) for each fertile sow next year, double this year's rate, the Xinhua News Agency said.
The move is meant to "ensure adequate market supply and stabilize food prices," Xinhua said.
The Cabinet also promised to spend 2.5 billion yuan ($300 million) next year to help breeders build "standardized, large-scale" pig farms, the report said.
China's pork production fell sharply this summer due to high feed costs and an outbreak of blue-ear disease that prompted the government to destroy thousands of animals.
Beijing earlier promised pig farmers free vaccinations and other aid, and ordered banks to extend them credit.
Other measures announced Wednesday included ending rebates of export taxes on wheat, corn and other grains. The step appeared to be intended to push Chinese producers to sell more of their output at home, reducing pressure on prices.
The government plans to release part of its corn reserves onto the market to curb rising prices, Xinhua said.
一个有趣的故事; also reminds me of another one...
煮豆燃豆萁，豆在釜中泣。本是同根生，相煎何太急。
这是曹植的“七步诗”
含义：
曹氏父子三人是三国时期的著名文学家，合称三曹，为中国文学史留下了许多不朽篇章，曹植的“七步诗”更是一段佳话，其意义已不在是此诗本身价值，它包含了深遂的政治内含，成了久远的历史长河中为了争夺地位、权力、财产兄弟反目手足相残的一种写照。
煮豆燃豆萁，豆在釜中泣。本是同根生，相煎何太急。
勿用说，这是曹植向其兄曹丕的控诉书。
是呀，曹植确是曹丕的劲敌，他曾获其父曹操的特别喜爱，曹操也曾一度欲废曹丕而立其为王太子，得曹丕之忌恨也是情理之中事。在曹植十几岁的时期，曹操看到曹植的文章就很有点儿怀疑，认为是曹植请人代写的，而曹植请父亲当面测试，经过几翻面试，曹植的确“出口成文，下笔成章。若不是一些大臣的竭力反对，曹植真得就被立为太子了，曹丕与其弟曹植的斗争也就从这时代开始了。
有一次，曹操出兵打仗，曹植、曹丕都来送行，临别，曹植高声朗读了为曹操歌功颂德的拍马文章，大家十分赞赏，而曹丕泪流满面的向父亲送别，很让曹操感动，也掉下泪来，这一小小的举动拉近了曹丕与父亲的距离，加深了父子感情，看来父子亲情之间需要的是感情，而非马屁的。
还有一次，曹操欲派曹植带兵出征。带兵出征是掌握军权的象征 ，是曹操重点培养的征兆，曹丕得到消息，当然很为 恼火，怎么办呢？曹丕想得一个毒计，事先带着好酒好菜，跟曹植一起喝酒，灌得曹植酩酊大醉，曹操派人来传曹植，连催几次，曹植仍昏睡不醒，曹操一气之下取消了曹植带兵的决定。
看来，曹植只配当个不拘小节的文学家，难以担当足智多谋的政治家。
曹植与曹丕的斗争，曹丕是胜利者，最终继承了魏王位。按理说曹丕的地位和权力已基本巩固，可忌恨曹植的念头没有改变，这是何等的残忍无道啊。
其实，曹植并未犯下什么大罪，只是有人告发他经常喝酒骂人，他竟把曹丕派出的使者扣押起来，并没有招兵买马，阴谋反叛的迹象和征兆。这算不上犯罪，杀之怕众不服，曹丕便想出个“七步成诗”的办法，治罪其弟。所幸的是，出口成诗是曹植的拿手好戏，这“七步诗”便成了救命诗，曹丕不得不收回成命，降低曹植的官爵了事。
纵观上下几千年历史，帝王子孙和睦相处，互忍互让，不争权夺利的实在少的可怜。春秋时期的齐国的公子纠与公子小白（齐桓公），秦朝的扶苏与胡亥（秦二世），唐朝的玄武门之变……这样兄弟相残的例子数不胜数。
封建时代这种兄弟之间的争权夺利自相残杀现象是社会制度的必然结果，在那权力即一切的社会制度里，不择手段的争夺权力似乎是很正常的。推翻帝 制，建立民主共和，少了多少兄弟相残的悲剧。然而，特权不除，“七步诗”还是免不了有人来作。
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