CITIC considering Morgan Stanley buy

State-owned CITIC Group is reportedly considering buying a stake in investment bank Morgan Stanley, which is seeking new capital as the US financial crisis deepens, the South China Morning Post reported. Sovereign wealth fund China Investment Corp is also contemplating raising its 9.9% holding in Morgan Stanley to 49%, despite government reluctance to approve overseas acquisitions in the financial sector. Morgan Stanley is also said to be in talks with US bank Wachovia and UK-based HSBC Holdings. The Wall Street firm’s shares dropped 42% in the first three days of this week.