I wondered if they would call in their ownership of our debt in shares of companies or go after something they’ve wanted for a while, like Taiwan.
Looks like the Chinese are going to choose the buyout option. Welcome to our new Chinese overlords!
Morgan Stanley to Sell Stake to China Amid Loss – New York Times
Morgan Stanley posted its first quarterly loss ever on Wednesday after taking an additional $5.7 billion write-down related to subprime mortgages. The investment bank said it would sell a $5 billion stake to the China Investment Corporation, that country’s sovereign wealth fund, to shore up its capital.
The sale, which would give China about a 9.9 percent stake in one of Wall Street’s biggest investment banks, is the latest example of a foreign investor shoring up a Western financial firm in the wake of the housing meltdown.
Morgan Stanley’s $3.59 billion loss for the fourth quarter, or $3.61 a share, was a sharp drop from the $1.98 billion, or $1.87 a share, it earned in the period a year earlier. Analysts surveyed by Bloomberg News had expected a loss of 39 cents a share.
With the second write-down, Morgan Stanley has now lowered the value of its subprime holdings by $9.4 billion, one of the largest devaluations on Wall Street. In a statement, the bank’s chief executive, John J. Mack, said he took full responsibility and would forgo a bonus for 2007.
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