Morgan Stanley Competition
Now Viewing Morgan Stanley's competition in: Investment Banking
Recent Developments
Investment Banks Shift Focus to Asia - </strong>Global investment banks are transferring key talent to Asia and expanding services there, due to fewer US deal opportunities. About 15 percent of global investment bank revenue - up 10 percent in five years - and 18 percent of M&As are from Asia, excluding Japan, according to <em>The Wall Street Journal</em>. Investment banks' Asian operations had record-high revenue in 2007.
Industry Raises Prices First Quarter - Investment banks' prices finished first quarter 2008 higher than a year ago, due to a moderate increase in March. Prices at US investment banks and securities dealers were 4.7 percent higher in March 2008 than one year earlier, after falling in January and remaining flat in February year-over-year. Average annual industry prices rose 1.2 percent in 2007.
Slower Personal Income Growth Affects Consumer Investments - Americans' personal income and available spending money, indicators of consumer ability to invest, aren't growing as much as a year ago. US personal income grew 4 percent in March 2008 compared to a year earlier and disposable income, the amount available to spend, increased only 0.9 percent. Growth in income and disposable income has slowed in recent months from year-earlier levels.
Competitive Landscape
Demand is driven by economic activity that results in company mergers, acquisitions, or public financing. The profitability of an investment bank depends on its ability to accurately assess both the value of a business transaction and the readiness of the market to buy the attendant debt or equity. Big firms have an advantage because large customer transactions require firms with substantial financial resources. Small investment banks can compete by participating in syndications and operating in regional markets or specialized industries. Although labor-intensive, the industry produces very high value: average annual revenue per employee at large firms is close to $1 million.
Investment Banking Industry Forecast
from Hoover's/D&B subsidiary First Research
The output of US securities, commodity contracts, and investments, an indicator for investment banking, is forecast to grow at an annual compounded rate of 3.3 percent between 2007 and 2012.
Securities, Commodities, and Investment Growth Level
First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy.
First Research Opportunity Rating
The First Research Opportunity Rating is First Research's estimate of industry performance vs. industry risk over the next 12 to 24 months.
- Demand: Baby boomers have more money
- Need good marketing
- Risk: Falling asset values reduce fees
Industries Where Morgan Stanley Competes
- Financial Services
- Investment Banking
- Large-Market Investment Banking (primary)
- Asset Management
- Lending
- Securities Brokers & Traders
- Investment Banking
