Morgan Stanley’s Equity Underwriting Fees Receive A Boost In Q4

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Upbeat equity market conditions over the last quarter of the year had a positive impact on the total volume of equity underwriting deals for the period, with companies around the globe raising almost $195 billion through IPOs and FPOs. This represents a 3% increase from the figure for the previous quarter, and an almost 11% jump compared to the figure a year ago. While equity capital market deal volumes in the Asia-Pacific region remain elevated, the overall market size received a boost from a sharp recovery in deal activity in the U.S. as well as Europe.

Incidentally, the number of global equity issuances crossed 1,700 for the first time ever in the quarter. This compares with an average figure of just over 1,300 over Q2 2016 – Q3 2017, and indicates that the period was characterized by a large number of small equity underwriting deals. The resulting dearth of multi-billion dollar deals for the period hurt the equity underwriting desks at the largest U.S. investment banks, as they saw their market share fall from over 36% in Q3 2017 to 31% in Q4 2017.

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, and the market share figures here factor in the proportion of the total proceeds generated by a particular bank.

Morgan Stanley held on to the top spot in this list for three consecutive quarters after starting the year at #4. This is a commendable performance given that equity deal volumes in the bank’s core U.S. and European markets were depressed for most of 2017. While 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 over the year, Morgan Stanley’s strong showing in Asia Pacific and its key role in the $3.5-billion sale of Royal Dutch Shell’s stake in Woodside Petroleum helped it edge ahead of all its peers in Q4. 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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