Friday, September 19, 2008

News Line: China's Sovereign Wealth Fund considers increasing investment in Morgan Stanley to 49%

The Financial Times - The Great Wall Street of China

It has underwritten American consumers’ spending frenzy and picked up part of the tab for American mortgages. Is Beijing now going to assume ownership of a slug of Wall Street too?

Morgan Stanley, bounced into rescue talks by reeling share and debt prices, is in talks with China’s sovereign wealth fund. China Investment Corp may lift its 9.9 per cent stake in the US investment bank, made last December, to 49 per cent. Fair enough. If CIC believed Morgan Stanley was worth buying when the share price was above $50, it could, all else being equal, be almost twice as attractive at around $30. But China should be wary of playing buyer of last resort to hobbled US firms...

Click here to access the full story from the Financial Times website.