Morgan Stanley (MS - Free Report) has laid off around six employees in equity sales, trading and research department across Asia, as part of its cost-cutting drive. The news was first reported by Reuters, citing people with knowledge of the matter.
Cuts at the U.S. investment bank has affected mid-level staff and some senior executives, per one source. The employees laid off in Hong Kong, Singapore and other locations were informed in advance last week.
Marred by lower equity trading income in first-quarter 2019, Morgan Stanley has undertaken efforts to trim the department. The company supposedly fired five people from its equities sales and trading business in London last week.
Notably, trading income, which is largely dependent on the overall performance of the capital markets, constitutes almost 35% of Morgan Stanley’s net revenues. While trading revenues declined in first-quarter 2019, solid client activity and rise in market volatility supported trading revenues in 2018.
Given the expectations of global economic slowdown and geopolitical tensions, markets might remain volatile in the quarters ahead. Also, elevated expense base of Morgan Stanley is a major near-term concern, and will hurt its bottom line to an extent.
However, the company’s focus to strengthen its corporate banking unit, which is leading to steady rise in consolidated loans and lending commitments, is encouraging. Also, it continues to undertake inorganic growth efforts, latest being the deal to acquire Solium Capital, which will further boost wealth management business.
Shares of Morgan Stanley have lost 7.1% over the past six months compared with 7.2% decline of the industry it belongs to.
Currently, the company carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks from the finance space are Raymond James Financial (RJF - Free Report) , LPL Financial Holdings (LPLA - Free Report) and Stifel Financial Corporation (SF - Free Report) . All these stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, Raymond James witnessed an upward earnings estimate revision of 4.5% for the current year. Its share price has risen 6.7% over the past six months.
The Zacks Consensus Estimate for LPL Financial’s current-year earnings has been revised 9.6% upward over the past 60 days. Its share price has increased 28.7% over the past six months.
Stifel Financial has witnessed upward earnings estimate revision of 5.6% for current year over the past 60 days. Its share price has improved 15% over the past six months.
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