Morgan Stanley has been updating its numbers, having back in September argued that investments from sovereign wealth funds in western financial groups was set to accelerate.
Here’s their latest chart.
So that’s a total of almost $47bn in strategic stakes to SWFs and Chinese banks this year, of which:
- $37bn has come in the Q2 to Q4 period
- about $9bn has bone to alt asset mangers, such as GLG and Och Ziff
- about $18bn has gone to groups with a strong emerging markets angle
- about $19bn has gone to banks with a strong securities business
- c$8bn has come from Chinese banks, rather than SWFs per se
So as funding for banks has got materially tighter and more expensive, says MS, there seems to remain a relatively well-defined set of characteristics that appeal to the SWFs – Asia/EM exposure, securities brokerage, and/or modern asset management. Small to mid-cap mortgage banks need not apply.Morgan Stanley’s European banks team, led by Huw Van Steenis, says:
We created a crude screen based for other stocks which could fill the sweet spots. Our screening suggests UBS, CSG, Deutsche, Julius Baer, CSG, 3i, UBS, Deutsche Boerse, BME, Ashmore, Aberdeen, Man Group, Exchanges, Greek banks (focused on SEE) and other banks with strong EM bias, fit the profile of future SWF investment to some extent. Whilst alone this may not enough to transform valuations — as has been the case at LSE and OMX — we think this theme could help underpin some good value secular stories.
And yes; UBS, up more than 5 per cent on Wednesday on the back of the Citi-Abu Dhabi deal, is either doubly attractive or doubly in need as it appears twice in the list.