More uncertainty ahead of phase two deal: Morgan Stanley
Updated 10:22, 22-Jan-2020
By Teoh El Sen and Cheng Lei
01:47

Multinational investment bank Morgan Stanley predicts that the rest of the year is likely to be marred by further uncertainty as China and the U.S. negotiate terms for the next phase of an agreement, despite the de-escalation of trade tensions with the phase one trade deal signed. 

Morgan Stanley Asia-Pacific managing director and co-CEO Wei Sun Christianson said that a "phase two" would be "tougher" to manage by both countries because it's expected to cover structural changes.

"Obviously, this is just phase one, phase two would be tougher, as it would cover structural changes, which is far more complex.

"It would definitely take time, and will likely create additional uncertainty going forward. It's really important for China and U.S. to start to work together, and then start to figure out a way to benefit both countries and the rest of the world," Christianson told CGTN on the sidelines of the World Economic Forum in Davos.

Both China and the U.S., she said, represent two of the largest economies that has fundamentally very different economic and political systems.

"Therefore, in order to reach the phase two agreement, both sides need to really appreciate and understand their respective systems… to bridge that difference," said Christianson, who is based in Beijing.

Morgan Stanley Asia-Pacific managing director and co-CEO Wei Sun Christianson (L) speaks to CGTN's Cheng Lei at the World Economic Forum in Davos. /CGTN Photo

Morgan Stanley Asia-Pacific managing director and co-CEO Wei Sun Christianson (L) speaks to CGTN's Cheng Lei at the World Economic Forum in Davos. /CGTN Photo

Morgan Stanley sees improved sentiment, economic recovery in Asia

Christianson said although the Asia Pacific region has seen slowing economic growth, she expected to see economic recovery and improved business sentiment in 2020.

"Looking at this year, recovery is going to happen driven by two factors, one is from easing form the trade, and secondly easing of monetary policies," she said.

Christianson said the whole region benefits from an increased confidence and improved sentiment, as well as more capital expenditure spending and consumption, and these factors boosts the outlook for the investment bank in the region.

"We are already starting this year with a lot of activities. In terms of growth drivers, the first and foremost is the wealth and asset management business," she said, adding that the bank is helped by "this huge surge of wealthy people."

The Chinese government's promise to further liberalize the country's financial services industry was also a "game changer" for the sector, and for the likes of Morgan Stanley, she said.

Chinese regulators announced in 2017 that China would allow foreign firms to own majority stakes in local securities joint ventures, and the U.S.-based investment bank is seeking regulatory approval to raise its stake in its China-based securities joint venture, Morgan Stanley Huaxin Securities, to 100 percent.

"That really encourages foreign participation and also the inflow of capital, that creates great opportunity. Our investment banking business, we have a strong pipeline, especially in terms of equity capital market," she said.

Earlier this month, Morgan Stanley reported nine billion U.S. dollars in profit and a record 41.4 billion U.S. dollars in revenue, topping its 2019 results of 40.1 billion U.S. dollars the previous year.