Investor relations

6. A Commodities Revival

Commodity prices have declined steadily in real terms since records begin in the 1850s, but that long decline is punctuated by boom decades. We may be entering one now. 

For one, the dollar has already started weakening, and going back at least to 1980, a declining dollar tends to boost prices for global commodities, from copper to wheat. Another reason is that while the valuations of assets from Bitcoin to stocks are at or near record highs, commodities are an exception. After a down decade, they look hugely attractive. Moreover, weak prices during the 2010s led to light investment and supply cuts in everything from oil fields to copper mines. Couple tight supply with rising demand in a post-pandemic recovery, and you have the recipe for a revival in commodity prices. 

Ситуация в банковской отрасли

В 2020 году пандемия и приостановка работы многих предприятий вынудили банки создавать дополнительные резервы под кредитные убытки. Локдауны остановили работу множества предприятий из самых разных секторов экономики. Из-за этого бизнесу стало труднее оплачивать кредиты. Закономерно выросли риски невыплаты кредитов. А следом за ними выросли резервы под кредитные убытки.

Резервы банков США могут составлять до 3% всех кредитов с 2020 по 2022 гг. Этот уровень пока далёк от кризисного уровня 2008-2010 гг. Тогда эта доля составляла более 6%.

Резервы банков США под кредитные убытки в 2008-2010 и 2020-2022 гг

Банковские резервы под убытки в 2020 году

Из-за созданных резервов под убытки у банков в 1 квартале 2020 года резко упала рентабельность капитала (ROE). Восстановление показателя к доковидным уровням ожидается только в 2022 году примерно до 12%.

Это связано с тем, что при восстановлении экономики банки начнут расформировывать резервы по убыткам. Эта часть резервов пойдёт в прибыль банков.

ROE банков с 2006 года по июнь 2021 года

Рентабельность упала не у всех банков. Банки, которые ориентированы на комиссионный доход, не занимающиеся кредитованием, в отличие от классических банков, смогли нарастить ROE.

Это произошло из-за следующих факторов:

• всплеск популярности фондовых рынков во время локдаунов
• бум IPO

Инвестиционные банки менее рискованны, потому что они в меньшей степени подвержены кредитным рискам.

С наступлением пандемии ФРС ввела ограничения на увеличение дивидендов и бай-бэков финансовыми организациями. Это было сделано для того чтобы банки смогли накапливать капитал и поддерживать уровень кредитования.

В декабре 2020 года ФРС ослабила ограничения на обратный выкуп. После проведения стресс-тестов для крупных банков на достаточность капитала Федрезерв также обещает отменить ограничения и на дивиденды.

Акционеры

Morgan Stanley на начало 2019 года выпустил 1,69 млрд акций, из них 86,18 % принадлежит институциональным инвесторам. Крупнейшие из них на апрель 2019 года

1. Soggy Markets and a Surging Economy

Surveys show investors expect another strong year for financial markets, this time amid a recovering economy. We think they’re half right. The economic recovery is likely to continue, but markets could easily start moving sideways, for three basic reasons. Massive stimulus is still lifting economies but threatens to revive inflation and raise bond yields, with worse consequences for stocks than most investors realize. The 2020 surge in savings, much of which went into the stock markets, is also unlikely to continue, particularly as the pandemic winds down and consumers start spending again. Moreover, investors came early on to view the pandemic as a passing natural disaster, and its end is already priced in to record high valuations.

Record Pace of Stimulus Won’t LastTotal Government and Central Bank Stimulus Estimates in Response to Crisis (% of GDP)

Source: MSIM, IMF, UBS. Includes on-budget government stimulus data from IMF, off-budget government stimulus (corporate loan guarantees) from UBS and central bank stimulus from UBS. Developed markets aggregate is calculated using median of New Zealand, Australia, South Korea, Japan, Czech Republic, Switzerland, UK, Eurozone, Canada, US. Emerging markets aggregate is calculated using median of Colombia, South Africa, Turkey, Brazil, Mexico, China, India, Vietnam, Philippines and Indonesia.

2. Bottoming Inflation

When the coronavirus hit, policymakers felt confident that printing and borrowing more money at a record pace wouldn’t stoke consumer price inflation, which had been quiet for nearly four decades. But four factors are threatening to revive inflation:

• Depopulation: Growth in the global working-age population is falling, and a declining labor supply tends to increase wages.
• Deglobalization: Slumping global trade growth since the 2008 financial crisis continues to reduce competition.
• Declining productivity: The global decline, driven in part by governments bailing out unproductive companies, raises businesses’ cost and pushes up consumer prices.
• Debt: Rising government debt, including trillions to pay for pandemic stimulus packages, could be the jolt that reawakens inflation.

3. Housing in Demand

With inflation looming, investors are turning to traditional hedges against it, including housing. In 2020, home prices rose in virtually every developed country, and there are reasons to believe the boom can last.

Ninety percent of the world’s central banks have dropped short-term rates to record lows, which has in turn pushed 30-year mortgage rates to record lows—under 3% in the U.S. and even less in Europe. On the supply side, the stock of existing single-family homes available for sale is at an all-time low, relative to the adult population. After the pandemic dies down, lingering housing demand pressure from young families fed up with cramped spaces may continue to drive up home prices.

Q: What’s your outlook on SPACs going forward?

Schachter: Given the increase in SPAC issuance and higher quality of SPAC sponsors, competition among outstanding SPACs has led to evolution of the structure, to make it more aligned with the interests of all stakeholders, including the SPAC itself, the company that sells to the SPAC and the investors. Part of the product’s evolution is a new “promote” that SPAC sponsors receive.

In fact, Morgan Stanley has developed a new structure called a Stakeholder Aligned Initial Listing (SAIL) vehicle, which changes the entire “promote” and cost structure of a traditional SPAC. Instead of the SPAC sponsor receiving 20% of the equity of the vehicle (which results in immediate dilution for the target-company shareholders) irrespective of post-transaction share price performance, the SAIL promote is entirely performance based. The SAIL entitles the sponsor to an equity grant equal to a percentage of the post-merger capital appreciation on only the capital the SPAC delivers to complete the merger (not on the total equity of the combined company). The percentage is 20% for the first 30% capital appreciation and 30% for appreciation above that, with permanent high-water marks (a high-water mark refers to the SPAC’s highest peak in value, which means that if the combined company’s shares trade lower than the high-water mark, the SPAC sponsors receive no promote until the shares trade back above the high-water mark). This structure reduces upfront dilution because there is no equity grant out of the gate, it aligns the SPAC sponsor with other investors and rolling shareholders, and ties sponsor compensation directly to performance, much like a management incentive program does.

Looking ahead at the future of SPACs overall, we think sponsor teams and investors will continue to look for and evaluate innovative ways to create long-term value by aligning the “promote” with shareholder interests.

What’s something that surprised you about working here?

I had been here for only two or three weeks, and I was on a call with some very senior people. I recall listening to myself contribute to the conversation and realized people were actually agreeing with my feedback. I thought, “Oh, OK, I guess even though I’ve been here for such a short period of time, as long as I’m communicating something that adds value, people will actually listen.” That’s something I didn’t really expect. I definitely thought that if you’re junior, you would be expected to always listen to what higher-ups say and not the other way around. I didn’t expect it to be as collaborative as it turned out to be. That is the one key thing that defines working at Morgan Stanley. It’s easy to talk to people, and people are really trying to work together to solve problems. 

5. A Post-Dollar World

As the U.S. rolled out trillions of dollars in new stimulus spending in 2020, its debts to the rest of the world spiked to well above 50% of GDP—a level that has often triggered financial crises. Today, the dollar is the undisputed reserve currency, but the empires that held this coveted status in the past faltered when the rest of the world lost confidence that they could pay their bills. 

Up to now, U.S. policymakers saw no serious rivals to the dollar. But the big surprise of 2020 was the emergence of Bitcoin as both a store of value (a digital option to gold) and a medium of exchange (a digital option to the dollar). Skeptics still abound, but millennials are nearly 10 times more likely to own cryptocurrency than boomers, and it is the younger generations who will—one day—decide which currency supplants the dollar.

Company Information

Sustainability Disclosure

Question: Does Morgan Stanley publish a sustainability or corporate responsibility report?

Answer: Yes, Morgan Stanley has published an annual sustainability report since 2009. Our 2018 Sustainability Report focuses on investor-relevant sustainability and corporate governance topics in the spirit of the Sustainability Accounting Standards Board (SASB) guidance and the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). Additional information about our sustainability-related activities is available on our sustainability webpage. Our environmental and social risk management policies are available on our corporate governance webpage.

Ticker Symbol For Morgan Stanley

Question: What is the ticker symbol for Morgan Stanley’s common stock?

Answer: The Company’s common stock trades under the ticker symbol MS.

Morgan Stanley Stock Split History

Question: When was Morgan Stanley’s last split?

Answer: On December 20, 1999, Morgan Stanley announced a 2 for 1 common stock split in the form of a 100 percent stock dividend, payable January 26, 2000 to common shareholders of record as of January 12, 2000. In addition, both Morgan Stanley Group, Inc. and Dean Witter, Discover & Co. announced stock splits prior to the merger, which occurred on May 31, 1997. At the time of the merger, Morgan Stanley common shareholders received 1.65 shares of Morgan Stanley common stock in exchange for each share of Morgan Stanley stock they owned, and each share of Discover common stock automatically represented one share of Morgan Stanley common stock.

Morgan Stanley Dividend Information

Question: What is the frequency of the dividend distribution of the Morgan Stanley common stock and the amount of the cash dividend?

Answer: The amount of the cash dividend is announced every quarter in the earnings press release and is distributed about one month after the release. Currently the cash dividend is US$.25 per share.

Критика

Как и ряд других банков, Morgan Stanley подвергался критике за роль, сыгранную в финансовом кризисе 2007—2008 годов, в частности сокрытии от инвесторов высокого риска дефолта по ипотечным ценным бумагам. В 2014 году банк был оштрафован на $1,25 млрд правительством США и на $95 млн Пенсионной системой госслужащих Миссисипи. В феврале 2016 года банк согласился уплатить ещё $3,2 млрд федеральным властям. Кроме этого, против Morgan Stanley были поданы иски со стороны инвесторов, таких как China Development Industrial Bank (2010 год), IKB International S.A. (2013 год), Deutsche Bank (2013 и 2015 годы), U.S. Bank National Association (2013 год), Financial Guaranty Insurance Company (2014 год).

Расчёт собственных средств (капитала) («Базель III»)

Форма 123

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2019 год
2018 год
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на 1 января
на 1 февраля
на 1 марта
на 1 апреля
на 1 мая
на 1 июня
на 1 июля
на 1 августа
на 1 сентября
на 1 октября
на 1 ноября
на 1 декабря

на 1 января
на 1 февраля
на 1 марта
на 1 апреля
на 1 мая
на 1 июня
на 1 июля
на 1 августа
на 1 сентября
на 1 октября
на 1 ноября
на 1 декабря

на 1 июля
на 1 августа
на 1 сентября
на 1 октября
на 1 ноября
на 1 декабря

List of MORGAN STANLEY AND CO. INTERNATIONAL PLC Branches

MORGAN STANLEY AND CO. INTERNATIONAL PLC has a total of 37 branches located in 2 cities and 1 countries.

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Q: Why would a company use a SPAC vs. IPO?

Schachter: Because of the SPAC’s capital uncertainty (as I mentioned, the investors in the SPAC have redemption rights on the full amount of capital the SPAC raised in its IPO) and the cost of the SPAC’s capital (SPAC sponsors receive a “promote,” which typically grants them equity in the SPAC equal to 25% of the capital raised, or 20% of the fully-diluted SPAC shares), the SPAC has to offer something to the company that the IPO does not. That thing may be size—a SPAC can allow a company to raise a larger percentage of its equity than a typical IPO. Or that thing may be affiliation with a highly credentialed executive, executive team and/or financial investor that can bring others to invest in the combined company. A SPAC can also offer a high degree of flexibility for sellers to the extent that they want to cash out or roll into equity.

7. An Emerging Market Comeback

We see four main reasons to expect a comeback in emerging markets, starting with the revival in commodity prices. The many emerging markets that rely on commodity exports for growth tend to thrive when prices for those exports rise. Despite the fact that both exports and manufacturing are shrinking as a share of the global economy, a select few emerging countries, concentrated in Eastern Europe and Southeast Asia, are still growing on the back of export manufacturing. Financial distress caused by the pandemic is forcing emerging nations from Indonesia and India to Saudi Arabia, Egypt and Brazil to press a wave of market-friendly economic reforms. Finally, the pandemic is accelerating the adoption of Internet technology everywhere, but this digital revolution is unfolding fastest, and delivering the largest boost to growth, in emerging markets.

Today, the top emerging markets account for 36% of global GDP and just 12% of the global stock market, while the U.S. accounts for 25% of GDP and 56% of markets. Imbalances this extreme tend to diminish over time.

#2 Valuations Are Reasonable but Uneven

In another parallel with 2010, the market will enter 2021 on the heels of a post-recession rally. This raises the eternal question of whether stock prices have already baked in earnings improvements, but the strategists note that global equity valuations look reasonable by many measures, including risk premium relative to historical volatility, and the MSCI World index relative to the Global Purchasing Managers’ Index, a key indicator of manufacturing activity.

Additionally, COVID-19 cases and geopolitical uncertainty appear to be muting investor sentiment. “This suggests that the strong growth outlook we are forecasting is not fully priced into the equity markets,» says Sheets.

Though earnings growth should be consistently elevated, valuations appear uneven. Stocks in Europe and Japan, for example, have treaded water for five years, while U.S. small-caps and emerging markets have done so for three years. Sheets highlights that, coming out of 2010, U.S. small-cap stocks nearly doubled the return of the S&P 500. In other words, starting valuation is key.

Risk-adjusted valuations may now be reasonable
Risk premium (bp)

Source: Bloomberg, Morgan Stanley Research; Note: For equities we show our long-term expected risk premium forecasts, and for credit we show loss-adjusted spread. 10Y vol is realized vol of monthly returns. The dotted line shows the annualized return for S&P 500 versus UST 10Y since 1929 relative to realized vol of monthly returns over the same period.

#6 A Mixed Bag for Other Asset Classes

While the early-cycle playbook for equities and credit is fairly straightforward, the outlook for other major asset classes is nuanced. For example, commodity prices tend to rise in the early stages of recovery, but strategists think this strength will be back-loaded and with high dispersion.

Take oil, which tends to be a textbook early-cycle theme. This time around, many factors contribute to Morgan Stanley’s current call to pass on the commodity and buy the options instead. On the other hand, copper is a different story and Morgan Stanley metal strategists see it «ticking all the boxes» for a bull market in 2021.

For more Morgan Stanley Research on Global Strategy, ask your Morgan Stanley representative or Financial Advisor for the full report, “2021 Global Strategy Outlook: Keep Faith in the Recovery» (Nov 15, 2020). Plus, more Ideas from Morgan Stanley’s thought leaders.

Shareholders

Tax Basis in Shares Received in Eaton Vance Acquisition

Question: As a former Eaton Vance shareholder, how do I determine my tax basis in the Morgan Stanley shares I received in the Eaton Vance acquisition?

Answer: On October 8, 2020, Morgan Stanley announced its agreement to acquire Eaton Vance Corp. (Eaton Vance). After the closing of the acquisition, Eaton Vance merged with and into a wholly owned subsidiary of Morgan Stanley. The acquisition was completed on March 1, 2021.

Please see the following document, Form 8937 (Report on Organizational Actions Affecting Basis of Securities): Form 8937 + Attachment to Form 8937

This information is for illustrative purposes and not intended as tax advice. You should consult your tax advisor as to the specific tax consequences to you of the transaction under U.S. federal, state, local and foreign tax laws.

Tax Basis in Shares Received in E*TRADE Acquisition

Question: As a former E*Trade shareholder, how do I determine my tax basis in the Morgan Stanley shares I received in the E*TRADE acquisition?

Answer: On February 20, 2020, Morgan Stanley announced its agreement to acquire E*TRADE Financial Corporation (E*TRADE). After the closing of the acquisition, E*TRADE merged with and into a wholly owned subsidiary of Morgan Stanley. The acquisition was completed on October 2, 2020.

Please see the following document, Form 8937 (Report on Organizational Actions Affecting Basis of Securities): Form 8937 + Attachment to Form 8937

This information is for illustrative purposes and not intended as tax advice. You should consult your tax advisor as to the specific tax consequences to you of the transaction under U.S. federal, state, local and foreign tax laws.

Transferring Shares Of Morgan Stanley Stock

Question: How do I transfer Morgan Stanley shares from one shareholder to another?

Answer: Please call our Transfer Agent, Broadridge at 1-800-622-2393 or write to:

Contacting us via Overnight Mail
Broadridge Shareholder Services c/o Broadridge Corporate Issuer Solutions
1155 Long Island Avenue Edgewood
NY 11717-8309

Change Of Address For My Dividend And Share Accounts With Morgan Stanley

Question: I am a Morgan Stanley shareholder. How do I change my address for my dividend checks, annual report to shareholders and other company information?

Answer: Please call our Transfer Agent, Broadridge at 1-800-622-2393 or write to:

Note: If you need to change your address with your Morgan Stanley brokerage account, please contact your financial advisor or branch office.

Direct Share Purchase And Dividend Reinvestment Program (DRIP)

Question: I would like to enroll in your direct stock purchase and dividend reinvestment plan. How do I get started?

Answer: Please call our plan record keeper, Broadridge at 1-800-622-2393 or write to:

Obtaining A New Stock Certificate

Question: How do I obtain a new stock certificate?

Answer: Please call our Transfer Agent, Broadridge at 1-800-622-2393 or write to:

Note: Morgan Stanley discontinued issuing paper common stock certificates effective as of September 3, 2007.

Tax Cost Basis Worksheet

Question: How can I determine the tax cost basis of my Morgan Stanley common stock if I received my shares as part of the Sears spin-off in 1993?

Answer: If you are holding stock registered through Broadridge, please call Broadridge at 1-800-622-2393 for assistance in calculating the cost basis for Morgan Stanley and Sears stock. The Morgan Stanley/Dean Witter merger is tax-free to both Discover and Morgan Stanley shareholders for Federal Income Tax purposes. However, former Morgan Stanley shareholders may have to pay taxes on any cash received for fractional shares and may have to pay taxes as a result of the payment of certain transfer taxes paid by the Company.

8. A Digital Revolution

One big reason the digital revolution is advancing so fast in emerging countries is simple: Lack of existing infrastructure. With limited access to bricks-and-mortar banks, retail stores and other services, people are quick to adopt digital offerings. Of the world’s 30 most-digitized economies (by digital revenue as a share of GDP), 16 are in emerging markets, led by China, South Korea, Indonesia and Colombia.

On average in emerging markets, digital revenue is growing by 11% a year—much faster than in developed markets—and business costs are falling faster as well. This digital boost to productivity is likely to support an emerging-market comeback.

#4 Europe Is (Finally) Ready to Rebound

In their outlook last year, strategists noted that Europe, long unloved and undervalued, was set to turn around. Then COVID-19 sent most of Europe into lockdown, resulting in what will likely be the worst year of European relative performance since the 1980s.

While Europe continues to grapple with the pandemic, last year’s poor performance, coupled with strong fundamentals and policy support, could set Europe up for a strong “bounce back” next year— and even into 2022—says Chief European Equity Strategist Graham Secker, whose team forecasts European average earnings-per-share growth of 30% in 2021 and 20% in 2022.

Morgan Stanley strategists forecast solid equity returns across all developed markets over the next 12 months

Source: FactSet, Morgan Stanley Research forecasts

Выводы

Перспективы Morgan Stanley и Goldman Sachs Group

Оба банка развиваются, стараются идти в ногу со временем. Они добавляют к своим классическим услугам цифровые бизнесы, что делает банки привлекательными и показывает, что они не собираются отставать от трендов. Банки продолжат свою цифровую экспансию.

Оба банка являются прямыми конкурентами в инвестиционном банкинге. Оба они ориентированы на технологический сектор.

В 2020 году Morgan Stanley сохранил лидерство в сфере слияний и поглощений в секторе TMT. Компания сумела совершить сделок на сумму почти 341 миллиард долларов, обогнав Goldman Sachs Group. Goldman Sachs Group занял второе место по объёму сделок на сумму 306 миллиардов долларов.

Сделки в секторе TMT, совершённые Morgan Stanley и Goldman Sachs Group в 2020 году

Риски для Morgan Stanley и Goldman Sachs Group

1. Рыночный риск. Изменение рыночной конъюнктуры и настроений на рынках может повлиять на цены акций и вызвать нежелание компаний проводить IPO. Это может сильно ударить по доходам банков от андеррайтинга, а для них это существенная статья доходов
2. Правовой риск, который может проявляться в будущем. Финансовый сектор сталкивается с жёсткими правилами, которые затрагивают конфиденциальность и защиту данных пользователей. Банки должны строго придерживаться этих правил. В прошлом у Morgan Stanley были недостатки, связанные с защитой данных. В 2020 году компания была даже оштрафована на 60 миллионов долларов за неправильный вывод из эксплуатации 2 центров обработки данных

По мультипликаторам компании оцениваются адекватно — в районе 1,3 капитала. Для банков это хорошо, потому что норма варьируется до 2 капиталов при пиковых значениях.

Оценка Morgan Stanley и Goldman Sachs Group по мультипликаторам

По остальным значениям у Goldman Sachs Group есть небольшой дисконт, который уйдёт вместе с развитием цифрового проекта потребительского банкинга Marcus by Goldman Sachs.

И Goldman Sachs Group, и Morgan Stanley неплохо пережили кризис за счёт того, что они являются инвестиционными банками и не очень сильно зависят от кредитования.

Оба банка — в цифровой гонке. У Goldman Sachs Group есть небольшой дисконт. Это может значить, что банк может в какой-то момент отскочить немножко посильнее, чем Morgan Stanley.

В целом компании хорошие, вряд ли их кто-то сумеет сдвинуть с пьедестала. Но, с другой стороны, негативные веяния в макроэкономике и на финансовых рынках могут повлиять на их доходы от IPO, которые являются значимыми для обоих банков.

Будем наблюдать.

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