Insight Article Desktop Banner
 
 
Path
  •  
March 23, 2020
Five Sectors That Cannot Escape Climate Change
Insight Video Mobile Banner
 
March 23, 2020

Five Sectors That Cannot Escape Climate Change


Path

Five Sectors That Cannot Escape Climate Change

Share Icon

March 23, 2020

 
 

As the reality of climate change becomes inescapable, we are seeing governments respond more decisively to climate issues. In our view, one of the biggest risks that investors face is that financial markets are not pricing in the effects of policy responses to climate change fast enough. By seeking to identify areas where changing policies will eventually affect market pricing, investors can start to manage associated risks and tap into opportunities.

 
 

A risk that is both significant and likely

As managers of multi-asset risk-controlled portfolios, assessing and managing risk is at the heart of everything we do. We judge the risks posed by climate change as highly significant, and we are not alone: According to the World Economic Forum’s latest Global Risk Report, climate action failure is cited as the top risk when measured by “impact,” and comes in second when measured by “likelihood” over the next 10 years.1 For the first time, environmental concerns have topped the survey’s list of long-term risks (Display 1).

 
 
 
DISPLAY 1: Environmental risks perceived as high in likelihood and impact
9802118_Web-Display-1
 

Source: World Economic Forum, The Global Risks Report 2020, Global Risks Perception Survey, 2019-2020. Survey respondents were asked to assess the likelihood of the individual global risk on a scale of 1 to 5, 1 representing a risk that is very unlikely to happen and 5 a risk that is very likely to occur. They also assessed the impact of each global risk on a scale of 1 to 5, 1 representing a minimal impact and 5 a catastrophic impact.

 
 

Under the current commitment level, global temperature is on track to increase by 3 degrees Celsius by the end of the century.2 That is twice what climate experts warn is the limit to avoid severe economic, social and environmental consequences.

Policies are evolving, albeit unevenly

Climate-related disasters have cost $650 billion to the global economy over the past three years.3 Hurricanes, droughts and wildfires are eliciting regulatory responses, which in turn are pricing in the risks. But regulatory responses vary widely across regions:

  • EUROPE IS MOVING FORWARD.
    The EU has committed significant spending to support its green regulatory framework. The European Green Deal—dubbed Europe’s “man on the moon moment” by European Commission President Ursula von der Leyen—aims to make the Union carbon neutral by 2050. It is accompanied by a €1 trillion4 fiscal package as well as two €100 billion5 funds for heavily impacted regions and climate innovation. This spending is echoed on the individual-country level, with Germany passing a €54 billion6 package aimed at reducing carbon emissions.
    ASIA IS HEADED IN THE RIGHT DIRECTION.
    We are seeing a significant strengthening of climate policy across parts of Asia, and expect the Hong Kong Stock Exchange’s rising ESG disclosure requirements to have a knock-on effect on dual-listed Chinese companies. And after several years of testing and learning from regional pilot versions, China is launching its much-anticipated national carbon-trading scheme, expected to create the world’s biggest carbon market.7
  • THE UNITED STATES IS BACKSLIDING—FOR NOW.
    American climate policies are slowly moving backwards, but a Democratic election victory might mean the introduction of the Green New Deal. This would lead to a commitment for net-zero by 2030 alongside regulations on clean air, biodiversity, infrastructure and 100% renewable energy. While explicit costs are not stated, estimates run at around $2.5 trillion.8 Less ambitious alternatives such as the CLEAN Future Act could nevertheless represent a significant first step towards a legislative process for a net-zero aim by 2050.

Five sectors with clear winners and losers

Using tools such as the Sustainability Accounting Standard Board’s materiality matrix® and the PRI-backed Inevitable Policy Response, we identified five sectors with the largest spread between potential winners and losers from climate-related policies and market disruptions. These are sectors where diligent research can help identify the types of companies that are likely to benefit—or suffer—from shifting policies surrounding climate change.

1.     FINANCIAL SERVICES: AT THE HUB OF TRANSITION

Through lending and capital market activities, it is easy to see how the financial industry can either facilitate or hinder the transition to a low-carbon economy. If an unpredictable and catastrophic climate event were to occur—a so-called green swan—it could trigger a financial crisis that would affect the value of virtually every financial asset. But even less-extreme events can have major impacts through a range of physical, transitional and liability risks, including stranded assets, bad loans and lost asset value.

Challenges

One major hurdle facing financial services firms is the quality and comparability of data needed to assess “scope 3” emissions, which include all indirect emissions that occur in their value chains. For insurers—all of whom cite climate change as a risk factor—only 60% have developed models9 to monitor its effects on their actuarial assessments.

Leaders versus laggards

Banks are beginning the process of better understanding climate change risks as it relates to lending and exposure, including probabilities of default from brown assets that are at risk of carbon mispricing. And many have shifted lending towards green assets. With the green transition representing $50 trillion in investment over the next 30 years and $3-10 trillion in operating earnings, decarbonisation could present a material economic opportunity for those on the front line.10

Similarly, insurance companies with strong climate-change strategies will be better able to control premium risks while capitalising on the growing need for insurance protection from catastrophes, such as the recent Australian wildfires.

Financial services firms that neglect to do the hard work of assessing climate risks cannot hope to manage them. Those that fail to capitalise on the trend towards green investment and the need for protection against “green swans” are at risk of losing market value.

2.     METALS AND MINING: A NIMBLE STRATEGY IS CRUCIAL

A distinguishing feature of metals and mining companies is the long lifespan of their facilities and assets. As a result, these companies need to consider environmental risks far into the future, including post-closure.

Challenges

Climate-related concerns have already led to sharp reductions in production and increases in costs. Political pressures continue to disrupt the industry.

Leaders versus laggards

Nonetheless, mining companies can to some degree choose their own futures. As significant users of energy, they have the ability to shift their energy mix or install new renewables capacities.

With the global transition to lower carbon alternatives, miners can also seek to secure new sources of revenue. For example, the EU’s Green Deal will drive a shift towards electric vehicles (EVs) and an overall greater product mix of renewable energy. This is estimated to lead to an increased demand for lithium by 67% and for cobalt by 82%.11

Companies that manage to be nimble in shifting energy sources and acquire a foothold in delivering the required metals in the new low-carbon economy are more likely to survive than those that fail to adapt.

3.      OIL AND GAS: ASSETS COULD BECOME STRANDED

To meet the Paris Agreement’s goal of limiting global warming to less than 2 degrees Celsius in this century, fossil fuel projects that are already planned will need to be curtailed or abandoned.

Challenges

Despite regulatory pressures, oil demand is estimated to grow by 1 million barrels per day each year until 2025.12 There is sufficient carbon in known deposits of fossil fuels to breach the 2 degrees Celsius goal. Similarly, current planned projects, if completed, will result in global warming that exceeds the 2 degrees Celsius target.13 To stay within the 2 degrees Celsius threshold would entail stranding 30-50% of existing oil and gas reserves—a commitment that would require an increase in carbon prices and more stringent regulations on a global level.

Leaders versus laggards

The global reach, technical sophistication and massive balance sheets of many of the large oil and gas companies presents an opportunity to lead the transition to a low-carbon economy. Currently, renewable investments represent less than 1% of their capital expenditures (Display 2).14 Forward-thinking companies could devote more of their capital budgets to developing renewable energy sources.

 
 
 
DISPLAY 2: Investment in renewables is low but growing
9802118_Web-Display-2
 

Source: IEA, Capital expenditures on new projects outside of core oil and gas supply by large companies, absolute and as share of total capex, 2015-2019.

 
 

European oil companies, for example, are diversifying to prepare themselves for the transitioning economy by acquiring startup EV-charging companies and utilities. Companies that fail to diversify their revenue streams may find that their investments in developing oil and gas reserves may eventually end up as stranded, nonproductive assets.

4.     UTILITIES: A CARBON ADVANTAGE

Given that global electricity demand is predicted to increase by 1.5% p.a. for the next 20 years,15 the decarbonisation of electricity generation is central to achieving net-zero emissions. In 2018, energy from low-carbon sources—hydro, nuclear, solar, wind, biomass and other renewables—represented over 25% of global electricity generation.16 This trend is set to increase to 93% by 2050 as renewables become cheaper than thermal coal and other fossil fuels (Display 3).17

 
 
 
DISPLAY 3: Renewables are cheaper
9802118_Web-Display-3
 

Source: Morgan Stanley Research.

 
 

Challenges

In Europe, regulations, coal phaseouts and increasing carbon prices could cause billions in potential asset write-downs, while China, India and Southeast Asia are still heavily dependent on coal-powered utilities to meet rising energy demand. Similarly, nuclear is expected to grow in a limited number of markets, such as China, but around 23% of global nuclear power will be decommissioned by 2030, predominantly in Europe and Japan.18

Leaders versus laggards

Early adopters in renewable power generation will gain a “carbon advantage” that should enable them to gain market share from competitors. Utilities shifting towards a low carbon mix will have greater access to financing through sustainable debt issuance, which is set to exceed $400 billion across the market in 2020, driven by climate action.19 Meanwhile, companies with high carbon costs may struggle to secure financing from banks, insurers and investors, which are increasingly rejecting investments in coal.

5.     AUTOS: SHIFTING PRODUCT MIX

In September, we examined the trends shaping the auto industry in our article, Peak Car—or Just Bumps in the Road? Since then, excluding the near-term impact of the coronavirus, we have started to see a stabilisation in car sales in China and Europe (Display 4). Nevertheless, automakers’ product mix is going through a major shift.

 
 
 
DISPLAY 4: Auto sales are stabilising
9802118_Web-Display-4
 

Source: Bloomberg, Morgan Stanley Wealth Management, 22 January 2019.

 
 

Challenges

From 1 January 2020, EU passenger cars face a new emission target of 95g CO2/km,20 with steep fines for exceeding this level. In 2018, fleet emissions among EU manufacturers averaged 121g CO2/km,21 so reaching the new target is only possible through a large-scale rollout of EVs. It seems unlikely automakers will be able to reach a sufficiently high EV penetration to avoid penalties.

Leaders versus laggards

The global surge in demand for EVs benefits EV battery manufacturers, particularly those in Korea, where they have strong links with automakers, and Japan, where manufacturers are developing solid-state battery technologies that are seen as the next big breakthrough. Auto manufacturers unable to achieve scale in electric vehicle production are likely to struggle. Original-equipment manufacturers that are not meeting CO2 emission targets will also see a decrease in profitability in their traditional business lines, such as the internal combustion engine.

 
 

Summary: The advantage of looking ahead

Climate change is a present risk we deem both significant and threatening. The adoption of climate policies across the globe are affecting the viability and profitability of many sectors. Five in particular—financial services, mining, oil and gas, utilities and autos—are experiencing the bulk of the disruption.

In our view, market pricing for many companies in these sectors has not kept pace with the rapid advance of policy changes. For our clients, this issue presents a window during which we can position their portfolios in advance of a potential market re-pricing. It could mean removing coal producers from our portfolios or overweighting areas where we see promising climate-related investment trends. In making these decisions, we continually look ahead to anticipate which types of companies stand to gain or lose from evolving climate policies.

 
 

1 World Economic Forum, The Global Risks Report 2020, Global Risk Perception Survey, 2019-2020.

2 New Climate Institute and Climate Analytics, Climate Action Tracker: https://climateactiontracker.org/.

3 Morgan Stanley Research.

4 European Parliament, “Europe’s one trillion climate finance plan,” News European Parliament, 15 January 2020, https://www.europarl.europa.eu/news/en/headlines/society/20200109STO69927/europe-s-one-trillion-climate-finance-plan.

5 Simon, Frédéric, “EU Commission unveils ‘European Green Deal’: The key points,” EURACTIV, 11 December 2019, https://www.euractiv.com/section/energy-environment/news/eu-commission-unveils-european-green-deal-the-key-points/.

6 Amaro, Silvia, “Germany’s $59 billion climate change package isn’t enough, analyst says,” CNBC, 23 September 2019, https://www.cnbc.com/2019/09/23/germany-climate-package-of-54-billion-euros-isnt-enough.html.

7 Timperley, Jocelyn, “Q&A: How will China’s new carbon trading scheme work?” CarbonBrief, 29 January 2018, https://www.carbonbrief.org/qa-howwill-chinas-new-carbon-trading-scheme-work.

8 Ezrati, Milton, “The Green New Deal And The Cost of Virtue,” Forbes, 19 February 2019, https://www.forbes.com/sites/miltonezrati/2019/02/19/thegreen-new-deal-and-the-cost-of-virtue/#17ad32643dec.

9 MSCI ESG Research LLC, Insurance Industry Report, 2018.

10 Morgan Stanley Research, “Decarbonization: The Race to Zero Emissions,” 25 November 2019, https://www.morganstanley.com/ideas/investing-indecarbonization.

11 Kavanagh, Thomas, “EU green deal could transform metals demand,” Argus, 3 January 2020, https://www.argusmedia.com/en/news/2044840-eugreen-deal-could-transform-metals-demand.

12 IEA, World Energy Outlook 2019: Flagship report—November 2019, www.iea.org/reports/world-energy-outlook-2019/oil#abstract.

13 Carbon Tracker Initiative, “Oil and gas companies approve $50 billion of major projects that undermine climate targets and risk shareholder returns,” 5 September 2019, https://www.carbontracker.org/oil-and-gas-companies-approve-50-billion-of-major-projects-that-undermine-climate-targets-andrisk-shareholder-returns/.

14 Morgan Stanley Research, “Decarbonisation: The Race to Net Zero,” 21 October 2019.

15 IEA Global Energy & CO2 Status Report 2019, Flagship report – March 2019: https://www.iea.org/reports/global-energy-and-co2-status-report-2019/emissions#trends-by-technology.

16 IEA, Global Energy & CO2 Status Report 2019.

17 UN PRI, Inevitable Policy Response, Forecast Policy Scenario: Equity Markets Impacts 2019.

18 Morgan Stanley Research: Does Nuclear Have a Role to Play in Decarbonisation 2018.

19 Moody’s Investors Service, “Sustainable Finance—Global: Green, Social And Sustainability Bond Issuance To Hit Record $400 Billion In 2020,” 3 February 2020, https://www.moodys.com/research/Moodys-Green-social-and-sustainability-bond-issuance-to-jump-24--PBC_1212910.

20 Official Journal of the European Union, “REGULATION (EU) 2019/631 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 April 2019 setting CO2 emission performance standards for new passenger cars and for new light commercial vehicles, and repealing Regulations (EC) No 443/2009 and (EU) No 510/2011,” 17 April 2019, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R0631&from=EN.

21 Morgan Stanley Research, “EV Battery Blueprint for Europe’s CO2 Emission Regulation,” 16 January 2020, https://ny.matrix.ms.com/eqr/article/webapp/1294aa90-60a5-11e9-9957-e2cf76cce1fa?ch=rpint&sch=sr&sr=3.

 
 

Risk Considerations

There is no assurance that the strategy will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the portfolio will decline and that the value of portfolio shares may therefore be less than what you paid for them. Accordingly, you can lose money investing in this portfolio. Please be aware that this strategy may be subject to certain additional risks. There is the risk that the Adviser’s asset allocation methodology and assumptions regarding the Underlying Portfolios may be incorrect in light of actual market conditions and the portfolio may not achieve its investment objective. Share prices also tend to be volatile and there is a significant possibility of loss. The portfolio’s investments in commodity-linked notes involve substantial risks, including risk of loss of a significant portion of their principal value. In addition to commodity risk, they may be subject to additional special risks, such as risk of loss of interest and principal, lack of secondary market and risk of greater volatility, that do not affect traditional equity and debt securities. Currency fluctuations could erase investment gains or add to investment losses. Fixed-income securities are subject to the ability of an issuer to make timely principal and interest payments (credit risk), changes in interest rates (interest-rate risk), the creditworthiness of the issuer and general market liquidity (market risk). In a rising interest-rate environment, bond prices may fall and may result in periods of volatility and increased portfolio redemptions. In a declining interest-rate environment, the portfolio may generate less income. Longer-term securities may be more sensitive to interest rate changes. In general, equities securities’ values also fluctuate in response to activities specific to a company. Investments in foreign markets entail special risks, such as currency, political, economic and market risks. Stocks of small-capitalisation companies carry special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies. The risks of investing in emerging market countries are greater than risks associated with investments in foreign developed markets. Exchange traded funds (ETFs) shares have many of the same risks as direct investments in common stocks or bonds and their market value will fluctuate as the value of the underlying index does. By investing in exchange traded funds ETFs and other Investment Funds, the portfolio absorbs both its own expenses and those of the ETFs and Investment Funds it invests in. Supply and demand for ETFs and Investment Funds may not be correlated to that of the underlying securities. Derivative instruments can be illiquid, may disproportionately increase losses and may have a potentially large negative impact on the portfolio’s performance. The use of leverage may increase volatility in the Portfolio. Diversification does not protect you against a loss in a particular market; however, it allows you to spread that risk across various asset classes.

ESG Strategies that incorporate impact investing and/or Environmental, Social and Governance (ESG) factors could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favour in the market. As a result, there is no assurance ESG strategies could result in more favourable investment performance. Earnings before interest and taxes (EBIT) is a measure of a firm’s profit that includes all incomes and expenses (operating and non-operating) except interest expenses and income tax expenses.

 
andrew.harmstone
Managing Director
Global Balanced Risk Control Team
 
 
 
 

DISCLOSURES

The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date of publication. The views expressed do not reflect the opinions of all portfolio managers at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

Forecasts and/or estimates provided herein are subject to change and may not actually come to pass. Information regarding expected market returns and market outlooks is based on the research, analysis and opinions of the authors. These conclusions are speculative in nature, may not come to pass, and are not intended to predict the future performance of any specific Morgan Stanley Investment Management product.

Except as otherwise indicated, the views and opinions expressed herein are those of the Portfolio Management team, are based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date hereof.

Certain information herein is based on data obtained from third-party sources believed to be reliable. However, we have not verified this information, and we make no representations whatsoever as to its accuracy or completeness.

The information herein is a general communication, which is not impartial and has been prepared solely for information and educational purposes, and does not constitute an offer or a recommendation to buy or sell any particular security, or to adopt any specific investment strategy. The material contained herein has not been based on a consideration of any individual client circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

Past performance is no guarantee of future results. Charts and graphs provided herein are for illustrative purposes only.

This communication is not a product of Morgan Stanley’s Research Department and should not be regarded as a research recommendation. The information contained herein has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This commentary is only intended for, and will be only distributed to, persons resident in jurisdictions where distribution or availability would not be contrary to local laws or regulations.

There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Prior to investing, investors should carefully review the product’s relevant offering document. There are important differences in how the strategy is carried out in each of the investment vehicles.

DISTRIBUTION

This communication is only intended for and will only be distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

Ireland: Morgan Stanley Investment Management (Ireland) Limited. Registered Office: The Observatory, 7-11 Sir John Rogerson’s, Quay, Dublin 2, Ireland. Registered in Ireland under company number 616662. Regulated by the Central Bank of Ireland. United Kingdom: Morgan Stanley Investment Management Limited is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No. 1981121. Registered Office: 25 Cabot Square, Canary Wharf, London E14 4QA, authorised and regulated by the Financial Conduct Authority. Dubai: Morgan Stanley Investment Management Limited (Representative Office, Unit Precinct 3-7th Floor-Unit 701 and 702, Level 7, Gate Precinct Building 3, Dubai International Financial Centre, Dubai, 506501, United Arab Emirates. Telephone: +97 (0)14 709 7158). Germany: Morgan Stanley Investment Management Limited Niederlassung Deutschland, Grosse Gallusstrasse 18, 60312 Frankfurt am Main, Germany (Gattung: Zweigniederlassung (FDI) gem. § 53b KWG). Italy: Morgan Stanley Investment Management Limited, Milan Branch (Sede Secondaria di Milano) is a branch of Morgan Stanley Investment Management Limited, a company registered in the U.K., authorised and regulated by the Financial Conduct Authority (FCA), and whose registered office is at 25 Cabot Square, Canary Wharf, London, E14 4QA. Morgan Stanley Investment Management Limited Milan Branch (Sede Secondaria di Milano) with seat in Palazzo Serbelloni Corso Venezia, 16 20121 Milano, Italy, is registered in Italy with company number and VAT number 08829360968. The Netherlands: Morgan Stanley Investment Management, Rembrandt Tower, 11th Floor Amstelplein 1 1096HA, Netherlands. Telephone: 31 2-0462-1300. Morgan Stanley Investment Management is a branch office of Morgan Stanley Investment Management Limited. Morgan Stanley Investment Management Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Switzerland: Morgan Stanley & Co. International plc, London, Zurich Branch, authorised and regulated by the Eidgenössische Finanzmarktaufsicht (“FINMA”). Registered with the Register of Commerce Zurich CHE-115.415.770. Registered Office: Beethovenstrasse 33, 8002 Zurich, Switzerland. Telephone +41 (0) 44 588 1000. Facsimile Fax: +41(0)44 588 1074.

U.S.

A separately managed account may not be suitable for all investors. Separate accounts managed according to the strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the strategy carefully before investing. A minimum asset level is required. For important information about the investment manager, please refer to Form ADV Part 2.

Please consider the investment objectives, risks, charges and expenses of the funds carefully before investing. The prospectuses contain this and other information about the funds. To obtain a prospectus, please download one at morganstanley.com/im or call 1-800-548-7786. Please read the prospectus carefully before investing.

Morgan Stanley Distribution, Inc. serves as the distributor for Morgan Stanley Funds.

NOT FDIC INSURED | OFFER NO BANK GUARANTEE | MAY LOSE VALUE | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY | NOT A BANK DEPOSIT

Hong Kong: This document has been issued by Morgan Stanley Asia Limited for use in Hong Kong and shall only be made available to “professional investors” as defined under the Securities and Futures Ordinance of Hong Kong (Cap 571). The contents of this document have not been reviewed nor approved by any regulatory authority, including the Securities and Futures Commission in Hong Kong. Accordingly, save where an exemption is available under the relevant law, this document shall not be issued, circulated, distributed, directed at, or made available to, the public in Hong Kong. Singapore: This publication should not be considered to be the subject of an invitation for subscription or purchase, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor under section 304 of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”), (ii) to a “relevant person” (which includes an accredited investor) pursuant to section 305 of the SFA, and such distribution is in accordance with the conditions specified in section 305 of the SFA; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. This material has not been reviewed by the Monetary Authority of Singapore. Australia: This publication is disseminated in Australia by Morgan Stanley Investment Management (Australia) Pty Limited ACN: 122040037, AFSL No. 314182, which accepts responsibility for its contents. This publication, and any access to it, is intended only for “wholesale clients” within the meaning of the Australian Corporations Act.

Taiwan: This material is provided for information purposes only and does not constitute a solicitation where such a solicitation is unlawful. The products mentioned herein this material may or may not have been registered with the Securities and Futures Bureau of the Financial Supervisory Commission in Taiwan, Republic of China (“ROC”) pursuant to relevant securities laws and regulations. Such products may only be made available in the ROC if they are (a) registered for public sale in the ROC or (b) availed on a private placement basis to specified financial institutions and other entities and individuals meeting specific criteria pursuant to the private placement provisions of the ROC Rules Governing Offshore Funds.

Korea: This material is not, and under no circumstances is to be construed as an offering of securities in Korea. No representation is being made with respect to the eligibility of any recipients of this material under the laws of Korea, including but without limitation, the Foreign Exchange Transaction Law and Regulations thereunder. The Fund’s mentioned herein this material may or may not have been registered with the Financial Services Commission of Korea under the Financial Investment Services and Capital Markets Act and may not be offered directly or indirectly, in Korea or to any resident of Korea except pursuant to applicable laws and regulations of Korea.

Japan: For professional investors, this document is circulated or distributed for informational purposes only. For those who are not professional investors, this document is provided in relation to Morgan Stanley Investment Management (Japan) Co., Ltd. (“MSIMJ”)’s business with respect to discretionary investment management agreements (“IMA”) and investment advisory agreements (“IAA”). This is not for the purpose of a recommendation or solicitation of transactions or offers any particular financial instruments. Under an IMA, with respect to management of assets of a client, the client prescribes basic management policies in advance and commissions MSIMJ to make all investment decisions based on an analysis of the value, etc. of the securities, and MSIMJ accepts such commission. The client shall delegate to MSIMJ the authorities necessary for making investment. MSIMJ exercises the delegated authorities based on investment decisions of MSIMJ, and the client shall not make individual instructions. All investment profits and losses belong to the clients; principal is not guaranteed. Please consider the investment objectives and nature of risks before investing. As an investment advisory fee for an IAA or an IMA, the amount of assets subject to the contract multiplied by a certain rate (the upper limit is 2.20% per annum (including tax)) shall be incurred in proportion to the contract period. For some strategies, a contingency fee may be incurred in addition to the fee mentioned above. Indirect charges also may be incurred, such as brokerage commissions for incorporated securities. Since these charges and expenses are different depending on a contract and other factors, MSIMJ cannot present the rates, upper limits, etc. in advance. All clients should read the Documents Provided Prior to the Conclusion of a Contract carefully before executing an agreement. This document is disseminated in Japan by MSIMJ, Registered No. 410 (Director of Kanto Local Finance Bureau (Financial Instruments Firms)), Membership: the Japan Securities Dealers Association The Investment Trusts Association, Japan, the Japan Investment Advisers Association and the Type II Financial Instruments Firms Association.

IMPORTANT INFORMATION

EMEA: This communication has been issued by Morgan Stanley Investment Management Limited (“MSIM”). Authorised and regulated by the Financial Conduct Authority. Registered in England No. 1981121. Registered Office: 25 Cabot Square, Canary Wharf, London E14 4QA.

The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the applicable European regulation or Swiss regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.

MSIM has not authorised financial intermediaries to use and to distribute this document, unless such use and distribution is made in accordance with applicable law and regulation. MSIM Ireland shall not be liable for, and accepts no liability for, the use or misuse of this document by any such financial intermediary. If you are a distributor of the Morgan Stanley Investment Funds, some or all of the funds or shares in individual funds may be available for distribution.

Please refer to your sub-distribution agreement for these details before forwarding fund information to your clients.

The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without MSIM’s express written consent.

All information contained herein is proprietary and is protected under copyright law.

Morgan Stanley Investment Management is the asset management division of Morgan Stanley.

This document may be translated into other languages. Where such a translation is made, this English version remains definitive. If there are any discrepancies between the English version and any version of this document in another language, the English version shall prevail.

 

It is important that users read the Terms of Use before proceeding as it explains certain legal and regulatory restrictions applicable to the dissemination of information pertaining to Morgan Stanley Investment Management's investment products.

The services described on this website may not be available in all jurisdictions or to all persons. For further details, please see our Terms of Use.


Privacy & Cookies    •    Terms of Use

©  Morgan Stanley. All rights reserved.