Anxiety Extends Morgan Stanley's Slide
The ticker in Times Square displays news about Morgan Stanley, which dropped for a fifth day after Moody's Investors Service said it may reduce the bank's credit rating.
(By Jeremy Bales -- Bloomberg News)
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Saturday, October 11, 2008
There may be no better measure of the fear ravaging Wall Street than the pounding that global investment firm Morgan Stanley suffered over the past two weeks, its stock price falling more than 50 percent in that time.
The battering happened even as giant Japanese bank Mitsubishi UFJ Financial Group announced -- and then reiterated -- its intent to invest $9 billion in the firm. The deal, which would give Mitsubishi $3 billion of common stock and $6 billion in preferred, was announced Sept. 29.
Some analysts declared Morgan Stanley's finances stable. But Moody's Investor Service, the rating agency, warned that Morgan Stanley's credit rating could be downgraded because of "the depressed market environment."
Company officials and some analysts said the plummeting stock price reflected panic and the effects of short-sellers. Chief executive John Mack had angered many major investors by lobbying for the ban on short-selling. That restriction was lifted Wednesday night.
"Morgan Stanley shares have been under extraordinary pressure as of late, for no apparent fundamental reason, as we estimate liquidity, the balance sheet, and long-term earnings prospects are sound," David Trone, an analyst with Fox-Pitt Kelton Cochran Caronia Waller wrote in a note Friday. "However, as we've seen with Bear Stearns and Lehman, once the fear virus has infected the story, it is tough to shake."
