Morgan’s return to Asia
What is JP Morgan up to in Asia? When the US commercial-turned investment bank announced it was hiring a raft of equities research and sales people from Dresdner Kleinwort Benson, all the talk was of this further proof of DrKB's demise. But what of Morgan?
Just two years ago it pulled out of Asian cash equities. Focusing on equity derivatives and private equity was a better use of shareholder capital, Morgan said at the time.
So is the bank's jump back into cash equities in the region yet further evidence of its fickle, fair-weather nature?
Well not quite. For all the noise at the time, JP Morgan had only a small presence in Asian equity markets. And its location was largely determined by where its derivatives team went. Initially based in Tokyo in the early 1990s, it moved to Hong Kong in 1994 mainly because Japanese regulations on derivatives were prohibitive. The small cash team just tagged along.
Three years later, Japan was rather more amenable to the wonderful world of derivatives, so Morgan, with most of its customer-base there, decided to move back. The cash equities group, say insiders, was so small it was shut down.