Research challenge tests young financial analysts
11 December 2013
A team of finance students from UC recently assumed the role of research analysts and took second place in the 2013 Chartered Finance Analyst Institute Research Challenge.
Deciding whether to buy, sell or hold onto shares and stocks is an area where many of us seek the prudent advice of financial professionals.
Recently, a team of finance students from the University of Canterbury (UC) assumed the role of research analysts and, in applying their investment analysis and advisory skills, took second place in the 2013 Chartered Finance Analyst (CFA) Institute Research Challenge.
Organised by the CFA Society of New Zealand, the challenge is part of a global tournament featuring university students competing in financial research and report writing. The challenge provides students worldwide with hands-on mentoring and intensive training in financial analysis and company valuation.
This year’s UC team of Likun Huang, Zach Taylor, Serena Tian, Jake Wilsea-Smith and Nicky Xiu, performed a variety of tasks including conducting research, valuing a publicly traded company and producing an investment report. The two-month challenge culminated in a presentation to a panel of high-profile investment professionals held in Auckland recently.
The UC team was mentored by UC lecturer, Dr Huong Dieu Dang, CFA, and Mr Roger Armstrong, an experienced fund manager at Christchurch-based Aspiring Asset Management Ltd.
“UC teams have performed well in the CFA Institute Research Challenge since its inception, winning the local competitions in 2008 and 2009, ranking second in 2010 and third in 2012,” said Dr Dang.
“The target company for this year was Auckland International Airport (AIA), the only airport listed on the NZ Stock Exchange. AIA’s capital structure differs markedly from its publicly-listed neighbour, Sydney International Airport. This posed some difficulties finding a comparable peer to value the company. AIA’s tentative plan to build a new terminal and improve its infrastructure in the future also raised uncertainties in its capital structure. Our students applied several approaches to value AIA and proposed a ‘hold’ recommendation.”
Dr Dang said the judges from AMP Capital Investors, Forsyth Barr and OnePath, commended the students’ in-depth analysis, particularly the valuation models which take into account a number of risk factors.
“All members of our team are undergraduate students. I’m very proud of how our students performed under pressure.”
For international students Nicky Xiu, Serena Tian and Likun Huang, the competition presented a chance to work with top students from diverse cultural backgrounds and prepare them for working in a business environment.
“This competition provides a valuable opportunity to touch on real business issues, gain a deeper understanding of the industry and build up your confidence. The whole process is intense and it’s important not to feel intimidated. You will learn more than what you would expect,” said Likun.
Jake said the work involved in the challenge was “interesting and gave a good deal of insight into how finance works in the real world”.
“While it is hard work, it's also an excellent opportunity and I recommend it to any who are thinking about a future career in finance.”
Serena said the competition gave her a great opportunity to work with the top students from diverse cultures.
Fellow team member Zach Taylor, will soon join PwC as an associate in the private client services division.
“The challenge was a great opportunity to get a taste of what is involved in being an analyst and to see just how much professional judgment is required in the world of finance. It involved a lot of hard work but the experience gained from participating in it was invaluable,” said Zach.
The finance courses offered by the Department of Economics and Finance at UC incorporate the rigorous CFA exam curriculum and provide students with strong analysis skills.
“Opportunities for students to apply what they learn through financial competitions gives them constructive insight into the world of financial institutions and markets,” said Dr Dang.
At UC, emphasis is placed on the three core areas of finance: corporate finance, investments, and financial institutions and markets. Subject to approval by the Universities New Zealand Committee on University Academic Programmes, UC will offer a new Master of Applied Finance and Economics (MAFE) in 2014. This is a coursework-based masters degree that combines traditional postgraduate training in finance and economics with intensive, hands-on applications of tools and techniques relevant to the business, financial, banking and public sectors.
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