Morgan Stanley's Trading Revenue Dropped in the Third Quarter
Morgan Stanley reported a big miss in the third quarter profit as a result of a decline in their trading and private equity business. Although they have shifted their focus on business segment with less risk, global economic slowdown has hit Morgan Stanley and other US banks this quarter.
Wall Street Journal, that the New York-based bank profit was accounted a $1.2 billion profit, a decline of more than 40% from the same quarter last year of $1.69 billion. Moreover, Morgan Stanley's Chief Executive Officer James Gorman mentioned that bond trading contributed the most to this quarter's loss for it has undergone one of the worst days since the financial crisis.
As one of the most prominent name in the world's financial market, this third quarter result of Morgan Stanley raises concern of its effect to the world economy. A series of chain effect from a sudden change in China's economy had triggered a slowdown in world economy.
Earlier this quarter, China stunned the world market with a sudden plunge of its stock market. The slowdown of China economy drew a great concern for the world economy. Gorman also remarked that this third quarter result of Morgan Stanley's missed profit had also been caused by the sudden economic slowdown in China as many analysts had predicted. Along with other factors included uncertainty of US Federal Reserve's changes of policy to handle the crisis.
Reuters also pointed out that along with Morgan Stanley, other US banks hurt from battered trading revenue. As a preventive measure, Morgan Stanley has already shifted focus to the less volatile segment in their business units in wealth management rather than their investment mangement and securities. Nevertheless, Morgan Stanley was unable to escape the economic uncertainty in facing the upcoming fourth quarter this year.
Morgan Stanley is not the only one facing a decline in this third quarter. According to Bloomberg, missed profit also happened to Goldman Sachs and JPMorgan Chase & Co in their bond trading revenue. With the recent economic condition and slowdown, an analyst of JMP Group Inc. in New York also told Bloomberg ahead of the announcement, acknowledging this third quarter was a difficult quarter.
This third quarter result is a disappointing result for Morgan Stanley ahead of the final quarter of this year. Although they have tried to focus on less prone to market swing, they are still unable to escape the global economic slowdown.