HONG KONG, April 17 (Reuters) - Morgan Stanley ( MS ) and HSBC ( HSBC )

are cutting dozens of investment banking jobs in the Asia

Pacific region this week, sources said, as they ramp up

cost-cutting, with weaker dealmaking and sluggish markets in

China and Hong Kong weighing on business prospects.

Morgan Stanley ( MS ) is cutting at least 50 investment

banking jobs in the region starting this week, three sources

with knowledge of the matter said, affecting around 13% of the

Wall Street bank's Asia investment banking workforce of 400.

Layoffs at the investment banking unit of HSBC ( HSBC ),

which makes the bulk of its profits in Asia, started on Tuesday

and is expected to see the departure of around 30 dealmakers in

the region this week, three separate sources said.

All of the sources declined to be named as they were not

authorised to speak to the media.

Morgan Stanley ( MS ) declined to comment on the job cuts. HSBC ( HSBC ) did

not respond to a Reuters query on Wednesday.

More global investment banks may follow suit in the near

future as they come under increased pressure to rein in costs

amid rapidly falling income from the capital market and M&A

advisory businesses.

The move marks a reversal of fortune for Wall Street

banks in Asia which had expanded their operations a few years

ago to grab a bigger share of the dealmaking activities in the

region, especially in China.

The cuts at Morgan Stanley ( MS ) and HSBC ( HSBC ) are among the largest

for the two banks' China-focused investment banking teams and

follow similar measures by other banks stung by a decline in

deal-making activities in China amid a slowing economy.

The top listing destinations for Chinese companies are

facing a drought in dealmaking and shrinking valuations.

Hong Kong's stock exchange saw 12 initial public offerings

(IPOs) raise HK$4.7 billion ($600.28 million) in the first

quarter, a drop of 30% year on year and the worst since 2009,

according to data from Deloitte.

Money raised via IPOs by Chinese companies, including both

on onshore and offshore bourses, plunged 80% in the first

quarter of this year compared to a year-ago period to $2.9

billion, according to LSEG data.

IPOs in mainland China dropped 82% from a year earlier to

just $2.4 billion during the same period, the smallest quarterly

fundraising since the fourth quarter of 2018, showed the LSEG

data.

The total value of merger and acquisition deals with China

involvement shrank by 36%, according to LSEG data, pointing to

smaller fees bankers earned from clients by advising on such

transactions.

As a result, a new round of staff cuts that began in late

2023 on the Chinese mainland and Hong Kong, key regional

investment banking hubs of Western banks, is set to gather pace

this year, bankers and recruiters have said.

In January, Bank of America ( BAC ) laid off around 20

bankers in the region, following a flurry of investment bank

downsizing by UBS, Citigroup ( C/PN ) and other boutique

firms.

Outside Asia, U.S. banking giants overall continued to shed

employees in the first quarter, with Citigroup ( C/PN ) seeing the

biggest drop. Banks are under pressure to control costs due to

the uncertain economic outlook.