Efforts to mollify Li Ka-shing after the announced removal of Cheung Kong (Holdings) from the Morgan Stanley Capital International (MSCI) index series reflect the sensitive nature of doing business in Asia's family-dominated corporate scene, according to analysts. 'You have to be very diplomatic out here,' one long-time research analyst said, pointing out that many of Hong Kong's biggest firms were controlled by the company founder or a member of his family. Morgan Stanley Dean Witter's Asia chairman John Wadsworth released a statement late on Wednesday praising Mr Li and his property flagship Cheung Kong. He also reiterated that the investment bank played no role in the decisions made by its majority-owned MSCI. 'Li Ka-shing is clearly among the world's outstanding business leaders and an increasingly powerful force in business globally who has created enormous value for shareholders over the years,' Mr Wadsworth said. The extraordinary comments - Morgan Stanley said it had never done anything like this on the back of an MSCI decision before - came a week after it was announced Cheung Kong would be removed from the index series from next month. 'Although Morgan Stanley holds a majority stake in MSCI, it is an entirely separate company whose decisions on index changes are entirely independent,' Mr Wadsworth said. While MSCI calls have been known to anger corporates and even governments in the past, the group's global head of marketing, Rabbe Ekholm, recently told the South China Morning Post that MSCI did not lobby its decisions to those who might be displeased. Thus Mr Ekholm said MSCI did not send a party to the mainland last summer to placate officials reportedly angered by the timing of the firm's favourable announcement on Taiwan's weighting in the midst of rising cross-strait tensions. Analysts believed Morgan Stanley, however, would have more desire to placate companies and governments upset by MSCI decisions due to concerns over its investment banking franchise. They said it reflected the heightened sensitivities of Asia's corporates, apparently, also shown in the sometimes 'kid gloves' approach to corporate analysis. Investec Guinness Flight chief investment officer Robert Conlon said: 'Everyone knows that essentially a hold [recommendation] means a sell.' He said investment bankers often brokered any negative information under the table. 'Sometimes you would expect your salesman to be able to explain in more detail exactly what the analyst thinks but can't say in print.' He believed the phenomenon was not exclusive to Asia but was part of the nature of investment banking, which derives income from corporate deal-making and commissions from share trading in the secondary market. Many analysts pointed out that the landscape was improving in Hong Kong. For example, the large Hong Kong corporates had long since dropped the habit of blacklisting analysts for unfavourable calls on a company. An analyst at a large Asian brokerage said: 'I know of no blacklisting but if they don't like you, they're harder to get a hold of.' Donaldson Lufkin and Jenrette property research head Michael Green, who has been in Hong Kong for nine years, said: 'I have never had a company not want to see me when they've had an underperform rating.' Mr Green, known for his bullishness in his high-profile career, said he had an underperform rating on Cheung Kong as recently as last year. 'We sent that report to Li Ka-shing as we normally do when we write a report and he actually had his office ring up and thank us.' Morgan Stanley Asian research co-head Peter Churchouse - quoted in the same press release as saying the stock 'should remain a core holding for fund managers in its own right' - yesterday emphasised a tradition of independent research at his house. 'I don't feel compromised by investment banking,' he said.