If you want stark evidence of the extent of investor concerns at the fragile state of financial markets, look no further than the share price performance of Morgan Stanley. The company had a terrific year in 2018, the stock did not. From a high of $59 in March, the price had fallen by 27% to $43 in the rout at the start of December. Yet this is one of the best run companies in the business.
At the start of each year, chief executive James Gorman famously lays out some strategic objectives. In January 2018, he set targets to hit a pre-tax margin in wealth management of 26% to 28%; a firm-wide efficiency ratio of 73%; a medium-term return on tangible common equity target of 11.5% to 14.5%; to return capital yet still to position the asset management business for growth, while also expanding leadership in the institutional securities group (ISG) that encompasses markets trading and investment banking.
In the third quarter of 2018, the firm reported an annualized return on tangible common equity of 13.2% delivered against a strong common equity tier-1 ratio of 16.7%,