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May 08, 2006 at 08:00 PM
SYDNEY, Australia (HedgeWorld.com)–Morgan Stanley is to establish a prime brokerage business in Australia, national daily The Australian has reported. While the U.S. banking giant already has a strong position in the Australian market, according to the article, it has hitherto serviced clients there from bases in Tokyo or Hong Kong.
It is probably a shrewd move. According to Axiss Australia, the financial services division of government agency Invest Australia, as of June 30, 2005, “[h]edge fund managers located in Australia control A$22.4 billion (US$17 billion) in assets, more than Hong Kong, Japan and Singapore put together,” according to data provided by research firm LCA publications.
When funds of hedge funds are included, the total size of Australia’s hedge fund industry reaches A$35.4 billion, again according to LCA figures, although this number makes no adjustments for double counting. According to the Axiss report, “The Hedge Funds Industry in Australia” (Data File 2006), available data shows that in the two years between June 2003 and June 2005, total assets under management of Australia’s single hedge fund managers and funds of funds tripled.
While Morgan Stanley is already Australia’s most important prime brokerage, servicing 35% of Australia’s hedge fund assets according to LCA, establishing a prime brokerage business there may be designed to head off competition from rivals Merrill Lynch, Fortis Clearing and UBS, which already have solid Australia-based teams.
