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Morgan Stanley’s Roach to Relocate to New York From Hong Kong

Morgan Stanley Asia Chairman Stephen Roach
Morgan Stanley Asia Chairman Stephen Roach looks on during the Clinton Global Initiative in Hong Kong. Photographer: Jerome Favre/Bloomberg

Morgan Stanley’s Asia Chairman Stephen Roach will return to New York from Hong Kong, ending a three-year stay in the world’s fastest-growing region, to take a teaching post at Yale University.

Roach, formerly the firm’s chief economist, will remain with Morgan Stanley and assume the role of non-executive chairman for Asia from July 1, the New York-based company said in a statement today.

The 64-year-old economist, who has predicted China will overtake the U.S. as the dominant economy by 2025, relocated to Hong Kong in 2007 to lead a push to arrange more takeovers and stock sales in the region. Roach, who joined Morgan Stanley in 1982, said he wants to rejoin his family after three years “living out of a suitcase” in Asia and plans to use the teaching post to correct “misperceptions” of China.

“I’m not walking away from Morgan Stanley,” Roach said in a telephone interview today. “I have a lot of our clients and will continue to spend as much time with them in the future as I have in the past.”

Roach will travel regularly for Morgan Stanley and “stay connected to clients, governments and regulators in Asia and other parts of the world,” the firm said in today’s statement.

He is also accepting a joint appointment at the Jackson Institute for Global Affairs and the School of Management, according to the statement.

Yuan Advice

Morgan Stanley rose to first place last year among merger advisers in Asia from seventh in 2007, working on 54 completed deals valued at $46.6 billion, data compiled by Bloomberg show. The firm worked on 76 deals valued at $67.2 billion three years ago, the data show.

Roach said last month that China’s policy of keeping its currency stable, which has been a point of contention for U.S. manufacturers and politicians, is “joined at the hip” to the asset allocation of its foreign reserve portfolio.

He has criticized Paul Krugman’s call for the U.S. to pressure China to allow a stronger currency, saying in a March interview with Bloomberg Television that it was “very bad advice.” Krugman, the Princeton University professor and Nobel laureate in economics, responded by saying he was “surprised” by Roach’s comments, and said that his call for a stronger yuan was “based on pretty careful economic analysis.”

Internal Demand

“My views have not always been popular mainstream views,” Roach said in today’s interview. “I have very critical views on economies and markets from time to time. The firm has given me just a great platform to express my views.”

Asian economies need to derive more from internal demand and not be overly reliant on exports to achieve a better structural balance, Roach said.

Before relocating to Asia in 2007, Roach had said the U.S. economy will stagnate because of an impending housing slump that would erode consumer spending.

Before joining Morgan Stanley in 1982, Roach worked at Morgan Guaranty Trust Company and on the research staff of the Federal Reserve Board in Washington.

Roach, who has a Ph.D. in economics from New York University, “is an intellectual leader on many global economic issues, including those related to China,” Morgan Stanley Chairman John Mack said in a statement announcing Roach’s appointment as Asia chairman in 2007.

At Yale, he will teach upper level undergraduates and graduate students with a focus on Asia and macroeconomic policy. His first course will be on the Chinese economy this fall.

“While Steve has made the decision to return to the U.S. and join the faculty at Yale, we are delighted he will also remain with the firm,” Chief Executive Officer James Gorman said in the statement.

Separately, Morgan Stanley plans to double its private bankers in Asia over the next three years as Gorman aims to boost profits from the global wealth management unit that he’d previously run. The company plans to hire almost 100 bankers in the region this year, Charles Mak, head of private wealth management for Asia, said in an interview.

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