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Morgan Stanley expands in Australia

Morgan Stanley is to set up hedge fund services in Australia for the first time, amid rapid growth in the region’s hedge fund industry.

The Wall Street banking giant will establish Sydney-based prime brokerage services to local funds, in a move that will consolidate its position as Australia's leading prime brokerage firm.

Until now, Morgan Stanley has provided services to Australia's $22 billion hedge fund industry from offices in Hong Kong and Tokyo, cornering about 35 per cent ofthe country's hedge fund assets.

The new offices will bring the New York firm into closer contact with the Australian market, where the hedge funds are expected to expand rapidly in the coming years.

Currently, Australian hedge funds account for only a small proportion of the global hedge fund industry.

However, the expected increase in the number of institutions investing in Australian funds is likely to increase the amount of fund-related business open to firms like Morgan Stanley.

At present, only 20 per cent of hedge fund investors in Australia are institutions, with high-net-worth individuals being the most enthusiastic about the investments.

Government projections suggest that the hedge fund industry in Australia could see a ten-fold increase to $220 billion within the next ten years.