Download Corporate Finance What - Hong Kong Securities and Investment

HKSI Career Talk Series
An Insider View of
Developing Your Career in
the Financial Industry
16 Nov 2007
Knowing our Strength
•
•
Our strength as an international
financial centre
– Location in the region & proximity
to PRC
– Infrastructure
– Talent pool
Finance services as the pillar industry
of HK economy
6.2% GDP in 1985 => 12.8% GDP in 2005
•
No. of practitioners grows steadily
SFC licensees: 20,201 in 2003 => 32,208 in Sep 2007
•
HK licensing regime – upholding the standards of practitioners
Grooming of Talent
•
HKSI is a professional and examining body,
dedicated to grooming new talent and
contributing towards building a professional
work force within the local finance industry
through the following initiatives:
– HKSI Sponsorship Programme
– Jobs2Click (online recruitment service)
– Membership services (professional
development of new entrants)
– HKSI Career Talk Series (provide useful
and practical guidance)
•
Senior industry practitioners or the Insiders
regularly share their real-life experience &
provide advice to those seeking a career in
Financial services.
Asset Management the Opportunities Ahead
Ms Samantha Ho (MHKSI)
Member of HKSI Membership Committee
Investment Director of INVESCO Hong Kong Ltd
Number of Licensees / Registrants
Table C1 - Number of Licensees / Registrants
表 C1 - 持牌人 / 註冊人數目
Licensed Corporations (LC)
持牌法團
HKFE
SEHK
As at end Participants Participants
截至
聯交所參與者 期交所參與者
SEHK/HKFE
Participants
聯交所/期交
所參與者
Registered Institutions (RI)
註冊機構
HKFE
NonSEHK
Participants Participants Participants
非參與者 聯交所參與者 期交所參與者
SEHK/HKFE
Participants
聯交所/期交
所參與者
Licensed Representatives (LR)
持牌代表
HKFE
NonSEHK
Participants Participants Participants
非參與者 聯交所參與者 期交所參與者
SEHK/HKFE
Participants
聯交所/期交
所參與者
Responsible/ Approved Officers (RO/AO)
負責人員 / 核准人員
HKFE
NonSEHK
Participants Participants Participants
非參與者 聯交所參與者 期交所參與者
SEHK/HKFE
Participants
聯交所/期交
所參與者
NonParticipants
非參與者
2003
2004
2005
2006
452
436
413
408
123
116
113
112
3
9
19
23
740
736
742
769
0
0
0
0
0
0
0
0
0
0
0
0
98
97
82
88
7,350
7,660
7,816
8,153
421
398
365
423
150
424
883
1,195
8,455
9,875
11,701
13,643
1,173
1,157
1,224
1,207
44
52
60
63
14
44
116
125
1,178
1,466
1,758
1,930
Total
總計
20,201
22,470
25,292
28,139
2006
9/2006
12/2006
409
408
113
112
23
23
751
769
0
0
0
0
0
0
86
88
8,081
8,153
404
423
1,178
1,195
13,348
13,643
1,183
1,207
64
63
126
125
1,843
1,930
27,609
28,139
411
111
23
787
0
0
0
93
8,293
433
1,257
3/2007
411
111
25
816
0
0
0
95
8,619
416
1,317
6/2007
415
112
26
840
0
0
0
98
9,137
405
1,454
9/2007
Remarks: LC includes licensed corporations, deemed licensed corporations and temporary licensed corporations
RI includes registered institutions and deemed registered institutions
LR includes licensed representatives, provisional licensed representatives, deemed licensed representatives and temporary licensed representatives
RO/AO includes responsible officers, provisional responsible officers, deemed responsible officers and temporary approved officers
Source: Securities and Futures Commission
14,124
14,982
16,021
1,241
1,268
1,317
63
64
72
130
138
139
2,067
2,132
2,172
29,033
30,394
32,208
備註: 持牌法團包括持牌法團、當作已獲發牌的法團及短期持牌法團
註冊機構包括註冊機構及當作已獲註冊的機構
持牌代表包括持牌代表、臨時持牌代表、當作已獲發牌的代表及短期持牌代表
負責人員/ 核准人員包括負責人員、臨時負責人員、當作負責人員及短期核准人員
資料來源：證券及期貨事務監察委員會
Responsibilities – Asian Investment
Team
1. Head of Investments,
Asia Pacific Region
• Provide quality control on investment team/process and
introduce enhancements if appropriate
• Resolve cross-border issues and leverage best practice
• Risk management
2. Chief Investment Officer
• Ensure disciplined investment process is followed
• Coordinate research efforts, supervise investment team
• Provide regional overview and strategy directions
• Coordinate portfolio construction and implementation within the
context of a specific mandate
3. Fund Managers
• Monitor and ensure synchronization buy/sell decisions
• Macro-economic research/liquidity analysis
• Specific country and portfolio responsibilities
4. Risk and Performance Analysts
5. Centralized Dealing
• Stock research and analysis  Monitoring List and Country
Models
• Risk and performance attribution analysis / investment team IT
• Best execution within compliance/audit structures
Top Down Country Allocation
Process
External Factors
Regional Factors
Growth
Earnings
EPS Trend
Valuation
Absolute
Relative
Yield Gap
Economic
Growth
CPI, i rate
M Supply
Trade, C/A
FX
Political
Country Risk
Govt Policy
Technical
Liquidity
Market
Accessibility
Market
Outlook
US Equities
US Bonds
Currency
US$
€
¥
Interest Rates
US
Europe
Japan
Regional Ranking
Bull Bear Profile
Country Allocation
(100% Equity)
Cash Level
Asset Allocation
(% Equity % Cash)
Economic
Growth
US
Europe
Japan
Technical
Fund Flow
Commodity
Investment Process - Overview
Country Allocation
Model Portfolios
Stock Selection
Stock Selection Process – Research
Execution
Fundamental Stock Analysis
Valuation
• P/E (prospective), PCF, PFCF
• Premium or Discount to NAV
• DDM, ROE
• Relative to historic, sector, market
Catalysts
Identification
Management/
Franchise Value Determination
• Management and Ownership
• Quality of Earnings
• Balance Sheet
• Product
Buy/Sell
Earnings Growth
• Growth in EPS
• Growth in Market Share
• Origin of Growth
(Organic, new project,
asset injection)
Price
Target
Liquidity
• Days to get in/out
• Total turnover
• Facilitates asset allocation
Stock Selection Process
STEP 3 – STOCK ANALYSIS
• Transparent and Disciplined Investment Process
Portfolio
Identify
Stock
First Cut
Analysis
Company
Visit
Detailed
Analysis
Prepare
Report
Peer
Review
Discard
Portfolio
Key Considerations
Screening:
- PBV Historical
- EPS Changes
- Growth
- Dividend
Research
-Internal
-External
Monitor List
SDRN
Financial
-ROE, ROI
-Cash-flow
-Balance Sheet
Valuation
-DDM
-PER, PCF, PBV
-Sector relative
-Country relative
Franchise
Management
Growth
Key Output
Free Cash-flow
Leverage
ROE > WACC
Sustainable Growth
- At least 15%
For illustrative purposes only.
Management
-Integrity
-Capability
-Product
Business Model
-Value Chain Analysis
-Industry Food Chain
-Product Analysis
Macroeconomic Issues
Update:
-Growth assumptions
- ROE Cycle
-Financial Analysis
-Management
-DDM
-Price Implied Growth
Identify Catalysts
Business Sustainability
-Relative Position on Food Chain
-Value creation
Growth Assumptions
-Normalized ROE
-Normalized Payout ratio
Takeover Value
- Private market
- Management buyout
Catalysts
-Management
-Industry
-Technology
Target Price
Stock Checklist
Target Price
Critique
-Business Model
-Growth Assumptions
-Discount Assumptions
Identify
-Confirmation Bias
-Accessibilty Bias
-Representation Bias
Identify Missed
Assumptions
Risk Management
Process Description
1. Risk Budgeting
2. Risk Monitoring
3. Performance and
Risk Management & Review
•
Set performance and risk objectives
•
Set risk budget for portfolios
•
Monitor portfolio holdings, tracking error, active
stock, sector and country bets through BARRA
and FactSet reports
•
Monitor portfolio active TE contributions, stock
liquidity
•
Monitor portfolio performance vs benchmark and
peer group
•
Review performance attribution analysis
•
Review portfolio realized TE vs target TE
•
Monitor portfolio characteristics
•
Ensure product integrity
•
Quarterly portfolio review
Overview of Operations Flow
OPERATIONS
Fund manager
- Make investment decisions
- Create orders
Central
Dealing Desk
- Execute orders with brokers
- Ensure best execution
Settlement
Fund Accounting
Compliance
- Confirm trades
- Send settlement instructions to custodians
- Cash management
- Asset reconciliation
- Fund valuation and pricing
- Monitoring conduct of the firm and employees
- Monitoring investment guidelines
- Providing advice and direction on compliance with and
interpretation of relevant regulations
- Developing compliance manual
Investment Banking the entrance and keys to
success
Mr John Williamson (MHKSI)
Director of HKSI Board
Chairman of HKSI Membership Committee
Chief Financial Officer of Search Investment Group
Career Options
•
•
•
Some high-powered jobs, such as those
in investment banking, demand long
hours.
Other roles, such as Business Support,
are becoming increasingly demanding.
There are jobs for specialists:
–
–
–
–
–
IT
Legal
HR
Finance
Operations
Fund
Managers
Compliance
Officer
Research
Analysts
Private
Bankers
Portfolio
Manager
Operations
Staff
Risk
Managers
•
Traders
In short, whatever your degree subject, if you want to work in
the financial services industry and have the necessary skills
and personal attributes, there is likely to be a job for you.
Investment Banking
•
•
•
Investment bankers often seen as the most glamorous
people - key roles & high financial rewards.
Work very long hours, enormous job pressure and must
maintain the keenest awareness of risk management,
stock market conditions, and economic trends.
Investment banking spans a wide remit including:
– corporate finance (raising capital for companies by issuing
shares or bonds);
– mergers and acquisitions;
– capital markets (trading in shares and bonds to make
money).
Corporate Finance
•
What
– Give advice to companies, institutions, and
governments about how best to raise finance.
– Help their clients to implement and achieve the
desired results.
•
Who
Team Players
Resourceful
Ambitious
Committed
– Many of those entering investment banking are young and highly ambitious; they have
a work hard, play hard attitude.
– Graduates looking to go into corporate finance, debt capital, or equity capital will need
to be high academic achievers, capable of processing large amounts of information in
a short space of time. Competition is high, but the rewards can be substantial.
– Firms recruiting in this area will be looking for team players - you will need to be
resourceful, ambitious, and committed. The hours can be long and socialising is often
done within the group, so it is important that you like your colleagues!
Mergers and Acquisitions
•
What
– advise clients as to which companies make good
takeover prospects or, alternatively, advise potential
targets on how to avoid being taken over.
– Advice can range from simple strategic suggestions
to detailed advice on how much to bid, how to finance
the bid, and launching any counter-bid.
•
Who
– As a graduate, you will be involved in the financial analysis, looking at the
company’s profits, strengths, and other key factors, as well as undertaking
preparation work such as checking documentation.
– You will also increasingly be involved in face-to-face meetings with clients,
including chief executives & entrepreneurs from a wide range of companies.
– The hours in M&A can be horrific. As deals are closing, working weeks may exceed
90 – 100 hours. However, the financial rewards can be significant and international
travel is commonplace.
Capital Markets
•
What
– A trading department where dealers buy and sell shares, bonds, and other assets
such as derivatives (futures and options).
– The job is highly pressurised. Dealers buy and sell on behalf of clients and banks, to
maximize money or to minimise financial risk.
– Teams of researchers will feed information to the dealer for making informed
decisions about whether to buy or sell.
– A successful dealer needs a great deal of insight, good personal judgement and an
element of luck!
– In volatile markets, trading becomes frantic and large sums of money can be made
or lost in minutes.
•
Who
– Graduates seeking to go into the trading
environment will need to have selfconfidence, determination, be able to think
on their feet and make informed decisions
quickly.
What You Must Know
Before the Interviews with Banks
• How Banks Are Organised and Structured
• The Top Ranked Banks
• What Qualities Banks are Looking for In the
Interview Process
• What Qualifications You Need and How You
Acquire Them
• Fundamental Valuation Techniques
• How To Get Invited to Interviews With Banks
• Why Choosing The First Employer Is Crucial
For Your Future Career
The Future of the Financial Industry
•
Increasing globalisation and use of information technology
•
Structural changes in the financial sector
•
More electronic transactions and outsourcing of functions
•
New and different forms of capital
•
Investment in technology, media, and telecommunications
•
Pensions gap pressure on investors
•
Emerging markets
•
Reputation and brand value
•
Access to finance
Globalisation
Outsourcing
New forms
Branding
In the Coming 10 or 20 Years
•
•
•
•
•
The sector will continue to attract able people who will, with the
right combination of talent & hard work, find enormous satisfaction
in the intellectual stimulation, teamwork, & financial rewards that
the industry provides.
New jobs in the financial sector may emerge, requiring more
specialist skill in niche markets and a greater focus on added value
and creativity.
New and different forms of capital will dominate the investment
scene, with greater mobilisation of individual wealth including
private equity and more widely accessible start-up capital.
Global financial service institutions will require the right expertise to respond to these
challenges, seeing the need to understand and respect the differences in the way
markets operate, while applying universal principles to each.
Forward-thinking financial institutions will generate market advantage and superior
returns by taking a longer-term view on company performance, allocating capital towards
activities which are more inherently sustainable, & providing innovative solutions to the
issues of environmental degradation, social inequity, and climate change.
My Advice is …
•
Think about your aspiration carefully…talk to
others in the industry.
•
Consider what kind of skills or talent you
have …or want to develop.
•
Learn about the history and developments of
industry.
•
Explore the sector(s) that interest you most.
•
Decide how you are going to prepare yourself to
succeed in this exciting but demanding industry.