Morgan Stanley Retains Top Spot In Equity Underwriting Despite Industry Headwinds

by Trefis Team
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The rally in global equity markets over the third quarter failed to boost equity underwriting volumes for the seasonally slow period, as companies around the globe raised $189 billion through IPOs and FPOs for the period – a 9% decrease from the $207 billion figure in the previous quarter, and slightly lower than the $190 billion raised a year ago. We believe this was primarily because U.S. companies that had been delaying equity issuances during the weak market conditions through most of 2016 went ahead with their capital raising plans over the first half of 2017. This is evident from the fact that the number of global equity issuances for the quarter (1,288) was well below the average of almost 1,400 over Q4 2016 – Q2 2017. Despite this, the total number of equity capital market (ECM) deals for the first nine months of 2017 (4,023) was the highest for any comparative period since 1996.

The lukewarm market conditions did not negatively impact the market share of the largest U.S. banks, though, as they leveraged their strong international presence to increase their market share to over 36% for the first time in ten quarters.

Equity underwriting volumes for individual banks were taken from Thomson Reuters’ latest investment banking league tables. It should be noted that the largest equity capital market deals (IPOs and FPOs) employ more than one investment bank, so the market share figures detailed here are not exclusive.

Morgan Stanley has now been at the top of this list for two consecutive quarters after starting the year at #4. The investment bank’s fortunes for Q3 were helped by its lead role in Crown Castle’s $3.9 billion equity issuance – the second largest equity deal this year after Snap’s $3.9 billion IPO in March – along with JPMorgan and Bank of America. Notably, JPMorgan worked on more deals in terms of total value than any other bank in the U.S. and EMEA (Europe, Middle East and Africa) markets, but Morgan Stanley’s strong showing in Asia Pacific helped the latter retain the top spot this time around. You can see how changes to Morgan Stanley’s share of the equity underwriting industry can impact our price estimate for the bank’s shares by modifying the chart below.

See the links below for more information and analysis about the 5 largest U.S. investment banks:

See full Trefis analysis for Goldman SachsJPMorganMorgan StanleyBank of America | Citigroup

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