Why Andy Xie Resigned?
By Steven Irvine

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 US$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.

p/s .... sigh....(again) ...