5 Oct 2006

Andy Xie’s Singapore swing

By Steven Irvine 4 October 2006

Morgan Stanley’s vocal star analyst suddenly resigns. An email he wrote about Singapore may explain why.

The market was shocked on Friday when Morgan Stanley announced that its Asia economist, Andy Xie, had resigned. The announcement was brief and mysterious, giving no explanation of why he was going or where he was going. With Morgan Stanley’s bonus period only two months away, it looked like a very strange time for the Shanghai-born Xie to leave the firm.

The Hong Kong rumour mill quickly began speculating as to why Xie had left. Attentions have focused on an email that Xie penned on September 18. Many copies of the email – which was about Singapore – have since been passed around by the region’s fund management and banking community.

The subject line of Xie’s email was ‘Observations on the IMF/ World Bank conference’. That event was hosted in Singapore, and the email was written just after the conference finished. The email consisted of nine paragraphs but it is the third and fourth that have attracted most attention.

“I tried to find out why Singapore was chosen to host the conference,” wrote Xie. “Nobody knew. Some said that probably no one else wanted it. Some guessed that Singapore did a good selling job. I thought that it was a strange choice because Singapore was so far from any action or the hot topic of China and India. Mumbai or Shanghai would have been a lot more appropriate. ASEAN has been a failure. Its GDP in nominal dollar terms has not changed for 10 years. Singapore’s per capita income has not changed either at $25,000. China’s GDP in dollar terms has tripled during the same period.”

Xie then continued that he thought some “were competing with each other to praise Singapore as the success story of globalisation. Actually, Singapore’s success came mainly from being the money laundering centre for corrupt Indonesian businessmen and government officials. Indonesia has no money. So Singapore isn’t doing well. To sustain its economy, Singapore is building casinos to attract corrupt money from China.”


These remarks were made in an email that Xie intended to be circulated internally within Morgan Stanley. But it got leaked, and was soon making its way around the region. This proved to be a highly embarassing situation for Morgan Stanley. Singapore is one of the US firm’s key investment banking markets in Asia.

Commenting on Xie’s departure a spokesperson for Morgan Stanley says: “We do not comment on personnel issues. We do not elaborate on the reasons of our employees’ departure.”

But on the subject of the email, the spokesperson adds: “This is an internal email based on personal suppositions and aimed at stimulating internal debate amongst a small group of intended recipients. The email expresses the views of one individual and does not in any way represent the views of the firm. Morgan Stanley has been a very strong supporter of Singapore and has a great deal of respect for Singapore’s achievements.”

Xie joined Morgan Stanley in 1997 and was a managing director. He regularly ranked highly in investor polls as one of the region’s most popular economists, thanks in large part to his direct style and forthright opinions. The 46-year-old, who has a doctorate from MIT, previously worked at the World Bank and Macquarie Bank.

Copyright FinanceAsia.com Ltd


If anyone has access to the email in full and has the nerve, post in the comment section please. I have found another extract from the email that was posted on bloomberg.
At a dinner party hosted by Singapore Prime Minister Lee Hsien Loong, ``people fawned him like a prince,'' Xie wrote. ``These Western people didn't know what they were talking about,'' he wrote, describing the praise for Singapore as ``nauseating pleasantries.''


From Financial News...
Referring to a dinner hosted by Singapore’s prime minister, Xie wrote: “I thought the questioners were competing with each other to praise Singapore as the success story of globalisation…These western people didn’t know what they were talking about.”





14 comments:

soci said...

If this isn't a damning reading of Singapore's economy, what is?

Capt_Canuck said...

The individual is obviously mistaken and confused. I mean, the PAP is known for stamping out internal corruption and shuns all illegal affairs and dealings. I mean, Singapore beats people for vandalism, fines people $500 for not flushing a public toilet, arrests them for speaking in public without a licence and has mandatory death sentences for drugs to name just a few things. I mean, how can a society so firm on illegal actions allow something like "(Singapore) being the money laundering centre for corrupt Indonesian businessmen and government officials." to happen in their country?

Mind you, without a firm opposition that is allowed to speak freely or newspapers that can do investigative reporting to look for things in closets, who knows what goes on in the underbellies of politics huh? The people sure aren't looking for things, so why should the newspapers and the opposition members are often laughed at.

Obviously, the guy was forced to quit by the company because his remarks in an internal email like that would surely get the company sued by the Lee family and the PAP as defamatory. So, the company probably forced him to leave to save the company of the embarrassment of a court case.

soci said...

What this 'outburst' from Xie does seem to highlight is the arguement that the News media in Singapore and the corporate interests of the government and companies have been singing from the same song sheet. Namely 'Singapore is an economic success because of globalisation'. This mysterious entity akin to Adam Smith's 'invisible hand, for Singapore has been nothing other than the acceptance of money gained from 'corrupt' foreigners and laundered in Singapore. I think there is an element of truth to what Xie says. However, reducing Singapore's success to one causal factor seems simplistic in nature. I would imagine that multiple factors have affected Sg success. Singapore's success has surely been brought about by a number of factors, one that I would like to propose is the lack of labour - working peoples concerns being voiced or galvanised by the PAP controlled press. A compliant workforce that accepts state intervention in wage issues is also a contributing factor.
The email is 'in Singapore context' defamatory. Imagine Dr Chee or FEER refering to Singapore as the prefered destination for ASEAN's corrupt officials and business people, Dr Chee's ass would be back in court again so fast he wouldn't know what hit him AGAIN.

soci said...

I would be up a mountain too. Sounds like an Elvis song?

Xie, 46, declined to comment on his departure when contacted on his mobile phone on Oct. 2 and said he hasn't decided on what he will do next.

``I'm not at liberty to comment on anything,'' Xie said. ``I'm in Guangzhou and I'm taking a break on top of a mountain. It's quite nice here.''

Matilah_Singapura said...

Why does the shit always hit the fan, when someone expresses a 'truthful' opinion?

This true story is based on fiction: "The Emperor's New Clothes".

Life imitating art.

Prez Nathan, please give the gentleman a "Cultural Medalion".

the murderous children said...

i'm dying to read the full text of the email in question. been googling for it since yesterday morning but to no avail!

this news story is truly intriguing.

Anonymous said...

This Xie guy has/had links with Morgan Stanley.

Lee Kuan Yew had links (very special and unusual ones) with Citibank. Go check the news.

If the missing link between Citibank and Morgan Stanley is established, the puzzle becomes very easy to solve.

Because nothing happens without a reason.

Anonymous said...

This moron deserves to get sacked. He doesn't know that Singapore's success is due to the PAP govt's ability to squeeze the citizens...first the juice then the blood.

Anonymous said...

imf came to SG because of the generous subsidies; simple

Anonymous said...

To anonymous at 10/06/2006 07:41:30 AM:

Actually you are half-right. The PAP squeezes its own citizens to get rich, but also to finance its terrible 'investment' plans overseas. Shin Corp, Suzhou... you name it.

Think about it: if you were to do business and all failures and losses are easily paid for by a third party, you wouldn't feel the pinch at all, would you? In fact, with that solid financial backup with zero accountability, you would become even more brazen, more reckless with your spending.

It is no secret that the PAP is doing business with Myanmarese military regime and some of its drug lords as well.

Anonymous said...

http://www.littlespeck.com/content/economy/CTrendsEconomy-061005.htm

Anonymous said...

Million$ Salary & stock options!

Anonymous said...

the full email:

http://www.littlespeck.com/content/economy/CTrendsEconomy-061005.htm

Andy Xie
The purported text of his leaked e-mail:

I participated in the panels on Commodity (sic) and China-India and in some obligatory dinner parties. On Friday night the Singapore prime minister invited the speakers at the meeting that the Singapore government organised. Trichet, Larry Summers, Paul Volker (sic) Chuck Price, the finance ministers of ASEAN countries were there. No government official from China was there …guess I was there to make it look like China was represented.

The dinner was turned into an Oprah with PM Lee Hsein Long (sic) at the center. The topic was on the future of globalization. People fawned him like a prince. Of course, he is. There are two reigning princes in the world that the Davos crowd kiss up to, Jordan and Singapore. The Davos crowd are Republican on economic issues and democratic on social issues. Somehow they manage to put aside their moral misgivings and kiss up to Lee Hsein Long and Abdullah.

I tried to find out why Singapore was chosen to host the conference. Nobody knew. Some thought it was a strange choice because Singapore was so far from any action or the hot topic of China and India. Mumbai or Shanghai would have been a lot more appropriate. ASEAN has been a failure. Its GDP in nominal dollar terms has not changed for 10 years. Singapore’s per capita income has not changed either at $25,000. China’s GDP in dollar terms has tripled during the same period.

I thought the questioners were competing with each other to praise Singapore as the success story of globalisation. Actually, Singapore’s success came mainly from being the money laundering center for corrupt Indonesian businessmen and government officials. Indonesia has no money. So Singapore isn’t doing well. To sustain its economy, Singapore is building casinos to attract corrupt money from China.

These western people didn’t know what they were talking about. Aside from the nauseating pleasantries some useful information came out of it. Trichet sounded very bullish on euro-zone economy (sic). He noted that euro-zone was catching up with the US in growth rate (sic) and talked about further gain in 2007. His tone was much more bullish than our house view. As Japan is surprising on the downside, I don't see how the rise of euro-yen could be stopped.

Larry Summers and Paul Volker (sic) were very worried about the US economy. As you probably know, Alan Greenspan is talking the same way. At the CLSA conference last week, he talked like one of his critics. There is fear of a US collapse. Many Americans think that an RMB reval (sic) would save the US. This is just a dream, in my view.

Most were worried about the future of globalisation due to income inequality. As average workers in the west are not seeing wage increase (sic), they may vote against globalisation. I thought that they were understating the benefit from cheap consumer goods. However, as inflation comes back, it does diminish the benefits for western consumers.

No-one was worried about the growth outlook for China and India. The Indian Planning Minister was very bullish, talking about 9% forever.

My sense is that policymakers are relexed (sic) about the short-term economic outlook but anticipate a US collapse at some point. Americans think that RMB reval could save the US. So they would keep pressuring China."

Andy Xie
Morgan Stanley

Anonymous said...

Yeah he is quite right...

A lot of Singapore's money come from Indonesia. If you look at the national Income equation, NY = C + I + G + X - M.

Most of the consumer spending, especially during the pre-crisis level are all made by the Indonesians. If you go to the boutiques in Orchard road, the restaurants, the top hotels, the private hospitals ( especially Mt. Elizabeth). Most of their customers are Indonesians. If you look at the property market, most of the house-owners along the River Valley road are Indonesians (till today). And, many more... Even the schools, I even heard of some Indonesians who donated $10K just to get into a neighbourhood secondary school, and their guardian would charge them exorbitantly about $1000 per person. Further, in a guardian house, there are usually 5 - 7 Indonesian kids. SO, you can see, how we have squeeze the money out of the rich Indonesians.

Further, some of Indonesians most wanted Millionaires are actually living here. For instance, Lim Siaw Liang, the head of super rich Salim group. He may worth more than what the Fortune 500 said, because most of his income was believed to be not declared.

One assumption he made though, is that all these Indonesians made their money out of corruption.