Morgan Stanley is bullish on its organization in China as original public offering activity there found after slowing the year before, a high executive at the expenditure bank said Wednesday.
Gokul Laroia, Asia Pacific co-CEO of Morgan Stanley, told CNBC that what he’s most positive about when it came to package flows and IPO activity on the coming year is the quality of general public listing activity in the region.
“Deals appearing out of China – and the reason why I discuss China is because it’s the principal driver of the activity – reflect the changing mother nature of the Chinese market,” Laroia said on the sidelines of the Morgan Stanley Asia Pacific Summit found in Singapore.
China has attemptedto rebalance its economy in the last couple of years by transitioning from a factory-led model of growth to 1 that’s driven by offerings and consumption, or what is often known as its “new market.” That shift features been reflected in the types of businesses with which the investment lender has been talking.
“We’re in discussions with over a hundred companies at this time in time, from education, healthcare, content, online retail, economic technology. So the combine has changed,” Laroia said.
“And the thing that’s changed as well as the mix is that the scale of these businesses [is] much bigger than we’ve ever before seen before. THEREFORE I think you will have an extremely robust supply over the next year or two,” he said, referring to the trend as “brand-new economy with scale.”
The global number of IPOs this year has improved after slowing in 2016, with stock exchanges in greater China accounting for the many listings globally by volume, according to a quarterly EY report in September.
As for the broader Chinese market, Laroia said that, even though credit tightening will have an impact on China’s development, the country’s monetary outlook was positive.
“Growth will slow, but I’ve always maintained that the quality of growth is a lot more important than the quantum of development,” he said.
“I believe we’ve seen a difficult landing in China. It happened a couple years back when nominal development proceeded to go from 12 percent to 5 percent. We’d a deflationary environment in China for three or four years. We’ve come out of that, therefore the quality of development right now in China [is] better,” Laroia said.