The job reductions, set to take place this week, will affect about 7% of the firms 800 equity analysts, said the people, who declined to be identified. New York-based Morgan Stanley plans to hire more people to cover equities in markets such as Eastern Europe, the Middle East and Asia to meet client demand for research in those regions, one of the people said.
They are trying to free up some resources and try to use those resources where they can generate a profit, said Jason Kennedy, managing director at recruitment firm Kennedy Associates in London.
A lot of the larger houses have been underweight in emerging markets and especially Asia.
Wall Street firms are under pressure to justify the cost of analysts as a decline in equity commission rates reduces the pool of revenue available to fund research.
Combined research budgets at the seven biggest US securities firms fell 40% to $1.5 billion in 2003 from 2000 as companies fired analysts and cut their compensation, according to Sanford C Bernstein & Co in New York.Morgan Stanleys memo was signed by Juan Luis Perez, the firms global head of research, and Jerker Johansson, global head of equities. Sebastian Howell, a company spokesperson in London, declined to comment on the firms plans on Wednesday.