Morgan Stanley to invest more in India: CEO James Gorman

Morgan Stanley to invest more in India: CEO James Gorman
Source- Nikkei Asian Review

Morgan Stanley is all ready to expand its businesses and that’s the reason behind the decision of investing more capital in India. This happens just because of the businesslike approach to development and governance through the technology of Prime Minister Narendra Modi, which makes India a compelling platform for industry and investors, said by James Gorman, CEO, Morgan Stanley.

“Decisions have been made as the clarity of action is very exciting,” said by Gorman after his first trip to India in seven years. “The anticipation to identify that you can jump over several stages of development through technology, take benefit of the truth that you don’t have legacy systems in so many industries. According to me, these are very positive.”

He denied making perceptions about the current weakening of the rupee as a depiction of poor economic management considering it an “unfortunate consequence” of the external factors. “The rupee deals on the basis of the act of dollar and not on the act of rupee right now”. At this phase of time, it’s the tail which is waving the dog or you can say its vice-versa. Therefore, the real truth is that what is happening in the US- all the possible traffic wars are disturbing all the emerging markets. It began with Turkey and Venezuela and is now having an impact on all the emerging markets,” said by Gorman. Politics of the Modi Government which are Trade-friendly is emphasizing us to invest more in the country, he added.

The US-based investor, which now focusing only on institutional business which includes investment banking, mergers and acquisitions, brokerage and private equity, advisory, will grow to add fixed income, infrastructure funding, and possibly distressed assets sometime in the future. Morgan Stanley has a fund group of infrastructure which so the investments all over the world. They increased $4 billion with the help of their first fund and $4 billion or $4.5 billion in their second fund and made an investment out of it all over the world.

If we talk about India, all we can say is it’s a crucial focus for us currently as there are immense needs and opportunities because of the growth in the economy and population. The CEO also gave a clue about the firm which will be growing into new places and that information will be released as soon as possible. He continued his statement by saying that they will be expanding in India, also on the fixed side of income, there is an order by the central bank to intensify the debt capital markets here and according to him, they perform really well in the debt market and infrastructure finance which makes them point towards the general direction.

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Vital Change

Gorman said the more independent foreign direct investment regime, new law of bankruptcy, rise in banking penetration, technology authorizer like goods and services tax (GST), Aadhaar, and high-scale development of infrastructure are changes that will make a long-term influence in India. He added that according to him, this time the situations are different a little bit in India. Talking further about India, he said that driving around in Mumbai is a bit difficult as the traffic is awful but the positive point is that reason behind the awful traffic is the construction of the new metro system. That’s why there are so many things which are changing in India which are long-lasting and are not going to have any effect of the changing political parties.

After getting involved into $3-trillion level economy and having some of the infrastructural reforms and introducing banking to a wider population, all of these are immensely positive scenario for the economy and this is going to be a prime reason of making India a center of attraction for the foreign players who are interested in engaging in this market, some by M&A. According to him, people will see more activity of M&A over the upcoming 10 years as compared to the previous 10 years.

On Global Financial Market, Gorman claimed that increasing interest rates could give pain, but economic fundamentals are powerful enough to control this storm even though protectionism and trade wars are true threats. “Financial markets go into critical point because there are orderly problems in the system of banking. In fact, the world economy is very strong. So, Morgan Stanley is obviously not in a financial crisis at this phase of time”.

World financial markets have been outraged in the previous few months by an increase in US interest rates and an increasing dollar which has created the flow of capital back to the country. Lots of arising markets consisting India have witnessed the weakening value of their currencies and rising interest rates. That has pushed central banks to increase interest rates and India is implying in place import restrictions to reduce the pressure on the rupee.



However, Gorman assumes that increasing rates indicates the strength of the economies and the present cycle is just a process of controlling the money markets to keep away an asset bubble. “This is slowly coming back to normal,” said Gorman. “Definitely, with the undo, there will be more confusion in the global markets. We will witness more uneasiness but not to the extent of the level we have already faced through much of the previous three or four decades.”

Gorman, a visitor at Wall Street who took over the control of the Global Financial Crisis singed the financial order, got rid of many businesses of the investment bank and has restored it with improved profitability ratios. This year, Morgan Stanley’s market value experience sudden flow which was more than its rival Goldman Sachs. One of the matters that could result in some worries is the trade war which is going on between countries which do not offer transparency as to how it would evolve. Gorman further said that “There are some of the matters which can be of our concern such as anti-immigration, tariff wars, protectionism, is not good for economic growth globally. But at this phase of time, there is no sign that we are stepping towards a new crisis”.