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Hedge Funds’ Favorite Research Shop

Morgan Stanley is once again the top ranked firm in II’s All-Asia Research Team: Hedge Fund Cut.

For the sixth year in a row, hedge fund managers have chosen Morgan Stanley as the best provider of Asia-focused investment research.

The bank placed first in the 2018 All-Asia Research Team: Hedge Fund Cut, with its analysts ranking at least third in every single sector covered by the survey. Twenty-one Morgan Stanley analyst teams ranked first in their division, down slightly from 25 last year.

“Our primary aim is to help clients generate alpha,” said William Greene Jr., director of Asia Research at Morgan Stanley. “We have a very broad and diverse set of clients with different time horizons, sectors,  geographies, and investment styles, and our research department is structured to meet those various demands and to help our clients succeed.”

The strategy appears to be paying off: Morgan Stanley also topped II’s broader All-Asia Research Team, which includes votes from traditional and long-only firms in addition to hedge funds.

Despite the “uncertainties related to MiFID II,” or the new update to Europe’s Markets in Financial Instruments Directive, Greene said the firm is continuing to invest in its research platform by developing existing talent and working to improve client engagement.

In Asia, that means addressing such investor concerns as China’s growth slowdown — which Morgan Stanley believes will be moderate thanks to “better exports and strong private consumption and investment.” Another major issue for investors in Asia is the impact of new tariffs, including a potential trade war between the U.S. and China.

“Our base case continues to be that negotiation will be the likely outcome, and regional trade will remain supported by global end-demand in the near term,” Greene said.

Morgan Stanley isn’t the only bank to appeal to alternative and traditional firms alike. In fact, the same five firms lead both the 2018 All-Asia Research Team and Hedge Fund Cut.

Bank of America Merrill Lynch, which placed fourth in the larger survey, ranked second among hedge fund voters, maintaining its position from last year. UBS and Citi placed third and fourth respectively in the Hedge Fund Cut — each one rung lower than in the more inclusive survey. Credit Suisse came fifth in both versions.

Global banks dominated both rankings, as opposed to local firms.

Morgan Stanley’s Greene said the ability to work with other analysts around the world and offer a global perspective is key to meeting client needs. “In a world where markets and economies are more interconnected than ever, we can tap into a global network of analysts to provide insights on trends that will have implications far beyond their respective shores,” he explained. “We stress collaboration across regions and sectors.”

The bank currently offers research covering about 3,300 stocks globally. In Asia and elsewhere, Greene said the size of the research department has remained “very stable” in the wake of MiFID II. “Morgan Stanley remains committed to its research product.”

The All-Asia Research Team drew on responses from some 4,700 investment professionals at 1,380 institutions managing an estimated $1.9 trillion in Asian equities, excluding Japan. Only votes cast by hedge fund employees counted for the Hedge Fund Cut.

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