Morgan Stanley faces mounting challenges in South Korea following exclusion from SK Hynix's $40 trillion ADR listing mandate and a series of failed transactions. The global investment bank was the sole major firm left out when Bank of America, Citigroup, Goldman Sachs, and JP Morgan were selected as lead underwriters for the record-breaking foreign company US IPO. The exclusion follows Morgan Stanley's repeated publication of negative reports on Korean semiconductor companies, including reports in 2017, 2021, and local time May 6 that recommended reducing positions in Samsung Electronics, SK Hynix, and Micron. Internal criticism has emerged linking the negative research coverage to deteriorating business relationships in the Korean market, with one former Morgan Stanley executive stating the Seoul office adopted a "cautious mode" regarding future conduct.
Morgan Stanley Publishes Repeated Negative Korean Semiconductor Reports
Morgan Stanley published three major bearish reports on Korean semiconductors in 2017, 2021, and 2024. The August 2021 report titled "Memory, Winter is Coming" marked the beginning of a difficult period for Korean semiconductor companies. The report author across all three publications was Shawn Kim, a Korean-American Managing Director who joined Morgan Stanley in 2002 and currently serves as head of Europe-Asia tech research based in London. The local time May 6 report, authored by Chief Investment Officer Michael Wilson's equity strategy team, recommended reducing exposure to memory semiconductor stocks including Samsung Electronics, SK Hynix, and Micron. The reports' influence stems from Morgan Stanley's position at the top of global capital markets, where its research opinions carry significant weight with foreign investors.
SK Hynix Excludes Morgan Stanley from $40 Trillion ADR Mandate
SK Hynix selected Bank of America, Citigroup, Goldman Sachs, and JP Morgan as lead underwriters for its US ADR listing, excluding Morgan Stanley. The $40 trillion transaction represents the largest US IPO by a foreign company in history. Applying the 0.5% fee rate reported by Bloomberg, the total underwriting fees to be divided among the four selected banks amount to approximately $130 million. Morgan Stanley's exclusion is notable given the firm's track record securing mandates for SpaceX and Anthropic IPOs and its status as a leading contender for the OpenAI IPO mandate. Multiple investment banking sources, including a former Morgan Stanley executive, reported internal discussions suggesting the SK Hynix exclusion resulted from negative Korean semiconductor research, creating pressure within the Seoul office to "be cautious going forward."
Morgan Stanley Fails to Complete Mirae Asset and Aegis Transactions
Morgan Stanley served as joint lead on transactions that subsequently failed to close. Mirae Asset Securities submitted an $1.14 billion subscription for SpaceX shares during the subscription period and received confirmation through the IPO lead underwriter's system, but was allocated zero shares in the final distribution. Questions arose internally at Mirae Asset about whether Morgan Stanley failed to transfer the subscription when handing off responsibilities to co-lead Goldman Sachs. Bloomberg published an article on local time May 30 stating Mirae Asset's own error caused the zero allocation, prompting Mirae Asset to file a civil lawsuit against Bloomberg on May 14. Morgan Stanley and Goldman Sachs also served as joint advisors on the sale of Aegis Asset Management, Korea's largest real estate manager with 73 trillion won in assets under management and 2 trillion won in National Pension Service capital. The transaction collapsed in December last year when final bidder Hillhouse, a Singapore-based firm founded by Chinese entrepreneurs, failed to secure acquisition financing.
FAQ
What did Morgan Stanley publish on local time May 6?
Morgan Stanley published a report on local time May 6 recommending investors reduce positions in memory semiconductor stocks including Samsung Electronics, SK Hynix, and Micron. The report was authored by Chief Investment Officer Michael Wilson's equity strategy team.
Why was Morgan Stanley excluded from the SK Hynix ADR listing?
SK Hynix selected Bank of America, Citigroup, Goldman Sachs, and JP Morgan as lead underwriters for its $40 trillion US ADR listing, excluding Morgan Stanley. Multiple investment banking sources reported internal discussions suggesting the exclusion resulted from Morgan Stanley's repeated negative research coverage of Korean semiconductor companies, though no official reason was disclosed by SK Hynix.
