TEXT OF STORY
Steve Chiotakis: We reported yesterday that Morgan Stanley is raising capital through a new stock offering. They want to pay back money received from the Troubled Asset Relief Program — TARP. Well today, we know who’ll be cutting a very big check toward that end: China. Namely, Beijing’s sovereign wealth fund. And as Marketplace’s Scott Tong reports, China’s getting in on a lot of deals these days.
Scott Tong: The China Investment Corporation already owns a piece of Morgan Stanley. Two years back, it bought $5.5 billion in company stock, which then lost half its value. So today, stocks are more affordable for the Chinese investor.
Michael McCormack is with research firm Z-Ben Advisors:
Michael McCormack: They looked at the direction Morgan Stanley’s stock price has been heading in in recent weeks and thought, maybe it might not be a bad idea to make our purchase now before this thing gets too expensive.
The Chinese fund now owns 9 percent of the bank, and says it expects Morgan Stanley to “resume its trajectory.”
McCormack says expect more deals like these in the coming weeks:
McCormack: They’re very keen to start increasing the amount of capital China invests abroad.
One bank economist thinks this is year China will send more capital to the outside world than comes in.
In one other deal, it turns out an obscure Chinese maker of dump trucks and heavy equipment is the buyer of GM’s Hummer brand.
In Shanghai, I’m Scott Tong for Marketplace.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.