CFA CHARTER AWARDS CFAS Newsletter v21Jan - lo-res.pdfcompetence conducted by Dale Carnegie Training consultant Alex Tan. He noted the importance of paying sufficient attention to

www.cfasingapore.org | Page 1

QuarterlyIssue 16 | Jan 2015 | www.cfasingapore.org

• The Year in Pictures• Past Society Presidents Reminisce Founding History of CFA Singapore• Commodities Trends and Opportunities• Toilets for Third World Peoples

CFA CHARTER AWARDS

Page 2 | www.cfasingapore.org

DETERRING STOCK MARKET MANIPULATION

2014 IN PICTURES

ANNUAL FORECAST DINNER

MARCH

Many retail investors were burnt in October 2013 when 3 small-cap stocks crashed after their stock prices were manipulated to unearthly heights. At a closed-door dialogue with SGX, industry experts discussed how market manipulation happens, what is being done to deter it and possible remedies. (March)

The panelists were: (Top, L-R) Former US federal prosecutor, Daniel Drosman | Lee & Lee Corporate Head, Adrian Chan (blocked) | SGX Chief Regulatory Officer, Richard Teng | facilitator Dr Tony Tan | OCBC Securities Executive Director, TK Yap, CFA | Rafflesia Holdings founder, Mano Sabnani

At the Annual Forecast Dinner, panellists included the following investment experts: (L-R) Chief Economist, Saxo Bank, Steen Jakobsen | Asia Pacific Head of Fixed Income, State Street Global Advisors, Ng Kheng Siang, CFA | Chief Investment Officer of Singapore Labour Foundation, Lim Li Ying, CFA | Investment Director of Eastspring Investments (Singapore), Ashish Goyal, CFA | Managing Director & Chief Investment Officer of Bank of Singapore, Hou Wey Fook, CFA (March)

PROSECUTING MARKET FRAUD

Leading US attorney Daniel Drosman discussed how his team prosecuted rating agencies for fraud that culminated in the 2007-2008 global financial crisis. (March)


2014 IN PICTURES

ASSET MANAGEMENT CAREER SEMINAR

CONDOLENCES FIRST GLOBAL RESEARCH CHALLENGE FINALS IN SINGAPORE

MARCH APRIL

CFA Singapore’s Asset Management & Career Development Committees hosted the first “Building Careers in Asset Management” seminar. (March)

Tan See Wee, CFA, Managing Director at ADAD Investments and Consulting, passed away at age 47 two months after he was judge at the local finals of the CFA Institute Research Challenge.

The global finals for the 2014 CFA Institute Research Challenge was held in Singapore for the first time. The team from the Philippines won the champion title. (April)

SMART BETAS

Asia CEO of Dimensional Fund Advisors, Dr Chen

Peng, CFA, discussed smart beta strategies

at a professional development talk.

(March)


SGX INVESTMENT FORUMFIRST SINGAPOREAN TO CHAIR CFA INSTITUTE

BOARD OF GOVERNORS

2014 IN PICTURES

BITCOININVESTING IN START-UPS

CHINA WATCH

SEPTEMBERJULYJUNE

Tembusu Partners’ Chik Wai Chiew provided insights to private equity investing at the 8th SGX Investment Forum. (June)

Lumen Partners Principal Dr Aaron Low, CFA, was elected Chair of CFA Institute Board of Governors with effect from September. Dr Low

is the first Singaporean elected to this position.

Bitcoin Exchange founder Zann Kwan, CFA, gave a 101 introduction on the virtual currency. (July)

SSE Centennial Professor of Finance and Private Equity at the Stockholm School of Economics, Per Strömberg, gave an introduction to investing in start-up venture capital. (April)

Professor John Wong provided an update to what is happening to China’s economy. (July)


2014 IN PICTURES

CFA INSTITUTE ASSET MANAGER CODE

CFA CHARTER AWARDS

OCTOBER DECEMBERNOVEMBER

Eight investments firms in Singapore were recognized by CFA Singapore and CFA Institute for their effort in protecting investor rights by adopting the Asset Manager Code of Professional Conduct. (September)

The award recipients from L-R: Dr Aaron Low, CFA, Lumen Advisors | Lim Li Ying, CFA, SLF Strategic Advisers | Luca Dotti, CFA, Valeur | Kensuke Suzuki, Hayate Partners | Mark Khoo, CFA, SilkRoad Property Partners | Usha Sreedhar, IDFC Capital (Singapore) | Andrew Maule, CFA, Fullerton Fund Management | Ian Holt, Eastspring Investments (Singapore)

The CFA Charter Award ceremony was held at Hotel Fort Canning to welcome new charter holders to the fraternity. (December)


BOARD MESSAGE

We held the 9th and final instalment of our Investment Fundamentals forum on 2 October 2014. The session focused on asset allocation and was the finale of our collaboration with SGX to present non-CFA charter holders in the finance industry with insights into professional tools used by CFA members.

Each forum session featured 5 to 6 expert panellists. Topics delivered included investing tools, macro-economic considerations, equity valuation, types of equity instruments, fixed income, equity derivatives & structured products, forex, private equity, hedge funds and asset allocation.

We sincerely thank the numerous senior CFA members, as well as our Advocacy Committee members, who generously gave their time to conduct the Investment Fundamentals forum sessions over the past 2.5 years.

In this issue’s cover story, CFA Institute’s President’s Council Representative for the Asia-Pacific region, Ms Sharon Craggs, CFA, DFICP, addresses new Charter holders at our Charter Awards held on 4 December at Hotel Fort Canning. That evening, we also had Mr Alex Tan conduct activities using the Dale Carnegie approach to help attendees think about professional growth through interpersonal competence.

Also featured in this issue of the newsletter are the following events.

• The Social Enterprise Investment Committee arranged for serial entrepreneur Jack Sim to speak on the market potential at the “base of the pyramid” | article Toilets for Third World Peoples – That led to businesses that end poverty.

• The Senior Members Committee arranged for Jodie Gunzberg, CFA, Global Head of Commodities for S&P Dow Jones Indices, to speak on using commodities as an asset class | article Commodities Trends & Opportunities

• Interviews with the Society’s past Presidents | article The Founding History of CFA Singapore

Other interesting activities organized by our Society volunteers, included the following.

The Professional Development Committee arranged for talks on investing with credit analysis tools and on China’s mobile Internet industry.

The Research Committee arranged for talks on investing in offshore jurisdictions as well as the 2015 outlook for Asian economies.

The Social Enterprise Investment Committee also arranged a talk on addressing the social needs of a corporate’s stakeholders.

Last but not least, the Networking Committee’s events included the Year-end Party as well as a guided museum tour to Leonardo da Vinci’s masterpieces.

Please approach our Committees or Board members on any initiatives that you would like to be involved in. Information on our committees may be found on www.cfasingapore.org.

Dear Members,

CFA Society Singapore Board


CFA Charter Awards

Commodities Trendsand Opportunities

The Founding History ofCFA Singapore

Jodie Gunzberg, CFA, MBAGlobal Head of S&P Dow Jones Indices

George Teo | TK Yap, CFA |Professor Joseph Lim, CFA |

Dan Schaefer, CFA

Toilets forThird World Peoples

Professor Jack Sim

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CFA CHARTER AWARDS CEREMONYAn Evening to Network with Top Employers

Of 26,882 candidates that sat for the Level III CFA exam in June 2014, 54% passed the third and final exam. Globally, 54,768 candidates passed Levels I, II, and III, with the overall pass rate for all three levels at 46%.

The CFA Charter Award ceremony organized by CFA Singapore on 4 December 2014 was attended by a multi-national crowd of new charter holders. Attendees had opportunity to network with representatives from top employers of charter holders.

New charter holders were welcomed into the CFA league with a self-assessment exercise in interpersonal competence conducted by Dale Carnegie Training consultant Alex Tan.

He noted the importance of paying sufficient attention to aspects of life other than career and finance. These other aspects include spirituality, health, personal interests, family, social life and community.

Presidents Council Representative Sharon Craggs, CFA (leftmost), Shaila Khandakar with Bangladeshi award recipients, 3rd from left to right:

• Safwan Khandakar, CFA

• MD Mominul Hoque, CFA

• Asef Anis, CFA

• MD Zakir Hossen, CFA

About 80 new charter holders attended the CFA Charter Award ceremony at Hotel Fort Canning on 4 December. The event was graced by the following speakers.

• Guest-of-Honour, Sharon Craggs, CFA, DFICP (CFA Institute Presidents Council Representative for Asia-Pacific)

• Alex Tan (Dale Carnegie Training Consultant)

• Kevin Gin, CFA, (CFAS Treasurer and Board Member)

• Arun Kelshiker, CFA (CFAS Board Member)


In his opening address at the Charter Award ceremony, board member Arun Kelshiker, CFA urged new charter holders to use CFA Institute resources in

the next stage of their career.

He highlighted The CFA Institute Asia-Pacific Career Guide, which profiles the career paths of

more than 30 successful CFA charter holders from 16 countries and territories in Asia Pacific, including

how they started and progressed in the industry and their success stories.

It also helps demystify various roles and fields in the industry as well as provides professional career

development advice, such as the use of social media in career development and interview and resume-

writing tips.

“I believe the CFA charter instils the highest professional ethics, expectations and expertise for

any professional organization, comparable with the engineering, medical or legal fraternities.

Look at the various interest groups on the CFA Institute and the CFA Singapore websites and think

about how to fulfil the passion of what we believe in for the CFA charter.”

Kevin Gin, CFA, board member and Secretary of CFA Singapore at the CFA Charter Awards.

“Making a life is understanding that not everything that can be counted counts. Not everything that

counts can be counted.

It is how good a life lived that counts, not how long it is. You have to trust, respect and like yourself.”

Sharon Craggs, CFACFA Institute’s President’s Council Representative for

Asia Pacific region at the CFA Charter Awards.


t

Representatives from top employers of charter holders and other stakeholders shared the joy of the award recipients…

Surinder Kathpalia, Standard & Poor’s Managing Director (left)

with Arun Kelshiker, CFA

Giuseppe Ballocchi, CFA, member of CFAI Board of Governors (left)

with Kevin Gin, CFA

Kanol Pal, CFA, Head of Financial Products, BNP Paribas (left) with Loh Hoon Sun, Phillip Securities

Managing Director


The 2 buy side analysts are new charter holders: Dave Wang, CFA, CAIA, Truston Asset Management (left) and Terence Lim, CFA, Artisan Asia-Pacific. Terence did Singapore proud in 2009 as an NTU undergraduate when he led the Singapore team to win the champion title at the global CFA Institute Research Challenge.

L-R: Rachie Hui, IBF Deputy Director | Alex Tan | CFA Singapore executive director Francis Er


CFA Singapore is among the top 10 largest societies of CFA Institute worldwide, and now has over 2,500 members. It was the first local CFA society outside North America, formed to address Singapore’s economic development needs.

Here is an oral history of the Society’s founding history, taken from interviews with its first 4 Presidents.

THE FOUNDING HISTORY OF CFA SINGAPOREThrough the Eyes of Past Society Presidents

THE FIRST CHAPTER

Singapore’s finance sector has roots in providing trading, finance and insurance services to support the regional trade of Southeast Asia.

Through the sixties and seventies, it evolved into a fairly sophisticated and well-established financial centre for banking, finance, insurance and foreign exchange. In the late seventies and eighties, fund management was introduced. In the late seventies and early eighties, a capital market was developed.

By the eighties, Singapore had become a successful financial centre. However, there was still a lack of depth in the capital and financial markets because of the dearth of investment professionals working here.

Former Monetary Authority of Singapore deputy managing director Koh Beng Seng then approached George Teo. At that time, Mr Teo was the chief executive of Sassoon Holdings and deputy chairman of the Stock Exchange of Singapore. Mr Koh asked Mr Teo to assist in the development of a financial analyst society in Singapore in collaboration

with the Institute of Chartered Financial Analysts and Financial Analysts Federation in USA.

In those days, the CFA Institute was known as the Association for Investment Management Research (AIMR). AIMR was formed from the merger between Financial Analysts Federation (FAF) and an independent organization — the Institute of Chartered Financial Analysts (ICFA) — that administered the CFA program. In 2004, AIMR changed its name to CFA Institute.

So, Mr Teo became the first President of CFA Singapore: Mr Teo: “With the encouragement of friends, business associates and the regulators of the securities industry, I started work on the formation of the local chapter of ISFA. “Joining me were like-minded people in the securities industry who were motivated towards improving the standards of discipline in the financial analysts in Singapore. “Our work was timely for Singapore’s development as an international financial and wealth management centre.


George TeoSSFA President, 1987-2001

“In order to help me understand the purpose of setting up the local chapter of the ISFA, I was introduced to the late Peter Morely, then President of the Financial Analysts Federation of the USA. He explained to me that the ISFA was an amorphous organization within US financial analyst societies to promote the internationalization of the CFA program, and similar structure of societies.

“The initial challenges were the drafting of the constitution, and getting people to sit on the first council of the Singapore Society of Financial Analysts.”

The first CFA exam in Singapore was conducted by the Institute of Banking & Finance.

In 1985, Tng Tai Kok became the first Singaporean to be awarded the CFA Charter.

On 16 September 1987, the registrar of societies approved the registration of the Singapore chapter of the International Society of Financial Analysts. It was renamed the Singapore Society of Financial Analysts before taking its current name, CFA Singapore.

Many of the pioneer members of the Singapore chapter were either employees of the Government of Singapore Investment Corporation (GIC) or the Monetary Authority of Singapore. John Koeneman, who was the GIC Director of Equities in 1984, recounted that the GIC staff then had no formal training in finance at all.

So, he got everybody on the equities team to sit for the CFA exam. The following year, there were a total of 19 candidates for all 3 levels. Three years later, the number of candidates increased ten-fold to 212.

“The response was overwhelming. So, we knew there was a very large pool of financial professionals who wanted

to acquire the knowledge of the CFA program.

“We joined the Asian Securities Analysts Council (ASAC) in 1991 so that the ASAC meeting could be held in Singapore. At the ASAC meeting that we held in 1994, Dr Goh Keng Swee, the former economic tsar of Singapore, was the keynote speaker.

“After the conference, we knew that Singapore would succeed in its efforts to deepen its capital market because of the pool of investment professionals that were added every year to the asset and fund management industry.”

Paul Smith, CFA (CFA Institute’s Managing Director of the Asia Pacific region) noted that societies in Asia tended to be young. But having been around for 25 years, CFA Singapore members tended to be older and were more likely to be at the top of their profession.


“We were all in this for a certain passion, a common shared interest and a common shared vision. I had a chance to actually work that vision as the President of the Society.“

“The biggest challenge at that time was the fact that we were no longer going to get any secretariat support from the Institute of Banking and Finance, which had been given to us for the previous decade on an ex gratia basis. Therefore, one of the first things I had to do was to set up a staffed office and ensure that it was run at a reasonable cost that would not burn up our reserves.

“The second thing was to structure a board that represented the various segments of the investment community. I undertook to really reach out to people from the buy side and the sell side. We had representatives from the academia.

We had representatives from the private wealth sector, an area in Singapore that was starting to see growth. I also felt that there was a need for someone from the advocacy scene come on the local board.

REACHING TOP EMPLOYERSand key stakeholders

VOLUNTEERSthe Society’s backbone

TK Yap, CFASSFA President, 2001-2003

Executive Director OCBC Securities

“We have a 5-year strategic plan that includes two key objectives based on member feedback. Firstly, continuing education and professional development. Secondly, raise the awareness of the CFA brand with top employers and key stakeholders.

“Having the full support of such smart people who have such a wealth of experience and coming from such diverse backgrounds is a really unique opportunity to help Singapore’s development as a global financial centre.”

Dan Schaefer, CFA CFAS President, 2007-2012

Director2Integrate.com

“My vision for the Singapore Society was for it to be member-based. Firstly, members must be able to access professional development. They must be able to attend talks where they can listen to experts talk about the areas of new development.

“I also wanted the Society to provide a place where members can come together to network.”

Professor Joseph Lim, CFACFAS President, 2003-2007

Associate Professor of Finance SMU


MISSION AND VISION

The mission of the Ethics in Finance - Robin Cosgrove Prize is to stimulate a global reflection on ethics in finance. Through the website, the Prize creates an international conversation on the sustainable future of the banking, financial services and insurance sectors on strong ethicalawareness and commitment to integrity.

It honours the vision of Robin, a bright investment banker who died at age 31. He believed passionately that more needed to be done to encourage young professionals in banking, insurance and other finance sectors to focus on building trust and ethical awareness.

The Prize is managed by the Observatoire de la Finance, a Swiss not-for-profit foundation based in Geneva (www.obsfin.ch) and DrCarol Cosgrove Sacks.

TO SUPPORT the initiative of this Prize, please contact Observatoire de la Finance.

Final deadline for submission of entries is April 15th, 2015.

HOW TO PARTICIPATE

The Prize is aimed at young professionals, academics and advanced students, under the age of 35.

Candidates are invited to submit unpublished written papers in English or French to the global edition.

Papers (maximum of 5,000 words including notes and bibliography) could be analytical in character or proposals for practical projects. In all cases, they should meet three criteria :

• intellectual rigour • innovative ideas • clear conclusions

If you intend to participate, please submit your expression of interest via www.robincosgroveprize.org. In return, you will receive the rules and an official application form.

An international jury of prominent experts in finance and ethics will designate prize winners and allocate the sum of USD 20,000 between them.

The prize winners will be announced at a special ceremony to be held in late 2015.


Jodie Gunzberg, CFA, Head of Global Commodities at S&P Dow Jones Indices, was in town on 15 October to introduce the why and how of accessing commodities trends.

RISK-RETURN PROFILE LIKESTOCKS WITH LOW CORRELATION

Commodities have a risk-return profile that is similar to equities, and yet have close to zero correlation with them. This can be seen using data from January 1976 to December 2013, showing equities (benchmarked by the S&P500®) had an annualized return of 8.0% for 15.0% risk while commodities (benchmarked by the S&P GSCI®) had annualized return of 6.9% for 19.1% risk.

Correlation was 0.18 for stocks and -0.02 for bonds (BarCap US Agg).

From 1970 to 2013, there were only 4 years in which both the S&P 500® and the S&P GSCI® both drop in value (1981, 2001, 2008 and 2011).

Ms Gunzberg also examined the years when the stock market took a beating. Average loss by the S&P500® was 17%, with only a 2.4% loss for the DJCI while the S&P GSCI® gained 44 basis points.

Historically, there have been many occasions when the stock market had a hard time as oil prices stayed high.

Such characteristics make commodities a good asset class for diversifying an equity portfolio.

While commodities futures contracts are highly volatile, commodities indices are less so, being diversified between the commodities sectors.

COMMODITIES TRENDS AND OPPORTUNITIESJodie Gunzberg, CFA, Head of Global Commodities at S&P Dow Jones Indices

Brazil (the source of 40% of the world’s coffee beans) suffered a major drought in 2014, causing coffee futures prices to nearly double year-on-year from around US$1.10 a pound to over US$2.20 in October 2014.

Should one go out and buy coffee bean futures just because prices have been soaring to record heights over the past two and a half years?


For example, the S&P GSCI® has 5 dif-ferent commodities sectors: energy, agriculture, livestock, precious met-als, industrial metals with 24 constit-uent commodities futures contracts.

S&P GSCI® (formerly known as the Goldman Sachs Commodity Index) is widely regarded as the best sin-gle gauge for general commodity price movements and inflation in the world economy.

The index is weighted according to world production value, analogous to market capitalization in equity (beta).

About 70% of the S&P GSCI® weight is currently in energy because of the relatively higher value of energy commodities.

For example, a bushel of wheat costs around US$5 compared to US$85 for a barrel of oil.

Some people think buying the S&P GSCI® is the same as buying oil. How-ever, Ms Gunzberg pointed out that data from 1983 to 2013 show that S&P GSCI® had a volatility (19.6%) of less than two-thirds of the volatility of S&P GSCI Energy (31.1%).

Another widely used index is the DJCI, which is similar to S&P GSCI®, except that DJCI is equally weighted between agriculture & livestock, en-ergy and metals. It has 23 constituent commodities futures contracts.

TT

The futures contract is a standardized agreement where the buyer agrees to buy and the seller agrees to deliver the underlying asset at a specific price on a set future date or expiration date. Most positions are closed before expiration to avoid delivery.

Futures prices are directly related to spot prices.

Spot market prices are simply determined by supply and demand factors for commodities inventories. Because it is not easy to build up inventories or draw down on them, price is the only equilibrium factor.

That’s why trend-following works in some commodities trading strategies.

Senior CFA members at the S&P Dow Jones Indices presentation.


If another 10% of the portfolio is replaced with commodities (for equities), Sharpe Ratio further increases.

“Because of the similarity in the risk-return profiles of commodities with equities, it is better to invest in commodities in the place of equities rather than in the place of bonds,” explained Ms Gunzberg.

INFLATION PROTECTION

Commodities index futures are also useful for inflation protection. There is a momentum effect when investing in commodities index futures that resembles inflation. This is the same concept as investing in the S&P500 for its proxy effect to stock beta.

An index comprising of commodities used in the Consumer Price Index showed a high correlation of 0.84 with S&P GSCI® and 0.72 with DJCI. The higher the energy component in the S&P GSCI® resulted in a higher correlation with the CPI index, because energy is used in the production of all other commodities.

The correlation of the S&P GSCI® came mainly from the effect of energy prices, as seen from the following data. Inflation beta was only 2.8 if calculated using data as far back as 1971, before the S&P GSCI® included energy futures contracts.

Both indices are designed to be investable by including the most liquidly traded commodity futures contracts, and provides diversification with low correlations to other asset classes. Every month over a period of 5 days, the expiring contract is sold, and the position is rolled over by entering into the next most liquid contract.

The value of commodities as a diversification tool has been true especially during crises. During political and economic crises, commodities prices have often been able to up hold their value while stock prices fell.

For example, during the Persian Gulf War in 1990, the S&P500 (orange line) went through a U-shaped valley while the S&P GSCI® (blue line) gained by 20% to 30% and sustained its gains. This is because people need commodities to fight a war. Commodities remained in demand as people needed oil, industrial metals and food.

A second example of commodities prices holding up during a stock market crash is during Black Monday in 1987.

REDUCING RISK WITHOUT LOSING RETURN

Even though the Sharpe ratio of commodities may not always be higher than for equities, it is useful for improving portfolio efficiency.

Hypothetical portfolios for 1976 to 2013 that replaced 50% of its equities with bonds showed Sharpe Ratio almost doubles – with risk being lowered almost by half for a 30 basis point increase in return.

Data from S&P Dow Jones Indices


If data history began from 1987, when energy futures were included, inflation beta jumped to 13.0 and above.

ASSESSING COMMODITIES TRENDS

A Barclays Capital survey showed that close to 70% of investors consider direct exposure the best way of accessing commodity trends, compared to commodity-linked debt, commodity equities and commodity currencies.

Investing directly in the cash or spot market (where raw materials trade for cash) is not practical for most investors, as they do not have storage capability for commodities (such as 1,000 barrels of oil or 40,000 pounds of livestock).

The most practical way of investing in the commodities market is through exchange-traded commodities futures contracts. These offer uniform, regulated and fungible contracts, meaning that a gold futures contract in New York is the same as a gold futures contract in China. There are specifications in a futures contract that require a certain quality of the underlying goods to be met.

For example, specifications for the WTI oil which is produced in the US and Brent Crude oil which is produced in the North Sea are very similar. In many cases, the two are interchangeable, depending on the location where the oil is coming from.

Examples of exchange-traded commodities include crude oil, corn, cocoa, wheat, cattle, aluminium, copper and gold.

Accessing commodities trends through commodities equities were also popular with the Barclays Capital survey respondents (close to 30%). Proxies to commodities trends included stocks of an oil & gas drilling company or a mining resources company.

However, commodities equities are not perfectly correlated to the underlying commodity as they are affected by broad stock market movements. Some producers may even hedge against the price volatility of the commodity they produce to reduce the volatility of their earnings.

Data from January 2006 to May 2013 showed agriculture equities to have a correlation of 0.38 to the underlying commodity. Equities of gold producers have a correlation of 0.66, and producers of oil & gas 0.67.

Yet, equities do play an important role, especially in regions where futures markets are not very developed. Some commodities such as steel, timber and water do not have developed futures markets, so it becomes difficult to get direct access, unlike commodities that do have futures markets.

Jodie is responsible for the product management of S&P DJI Commodity Indices, which include the S&P GSCI® and DJCI, which are among the most widely recognized commodity benchmarks in the world.

Prior to joining S&P Dow Jones Indices, Jodie worked for more than a decade analysing commodities. She was the chief investment strategist for an investment consulting firm, overseeing more than USD85 billion in assets. She is commonly quoted by the press and has been a guest on BloombergTV, CNBC, Fox Business, Reuters, Channel NewsAsia, ETNow and CCTV2.

She was also a board member for CFA Chicago.

Jodie Gunzberg, CFA, MBAHead of Global CommoditiesS&P Dow Jones Indices


“Excess wealth is destructive for the family who controls it unless mitigated with social work.

“When a scion inherits his family business, he also inherits the pressure to prosper in a ruthless business world, and the challenges of dealing ruthlessly with people.

“Charitable work, on the other hand, calls on the philanthropist not only to consider others’ welfare, but also to seek financial and related support from friends and relatives. Charitable work thus inculcates values of love and unity.

“It thus follows that those who practice ruthlessness against competitors subconsciously learn to be ruthless within their own family. Likewise, those who practice love and seek unity for the sake of the poor subconsciously learn to do the same within their own family.”


Do you know that as much as 40% of the world’s population do not have toilet facilities? And as many as one billion people (15%) still prac-tice open defecation. The absence of a healthy sanitary culture pol-lutes many economically emerging regions such as India, where 90% of all surface water is contaminated by faeces.

Most people avoid talking about sanitary health for fear of embarrass-ment, but there is a group of people who have devoted time and energy to help people in third world nations improve their sanitary conditions: Serial entrepreneur Jack Sim and his associates who founded the World Toilet Organization (WTO).

“We chose a name that puns on World Trade Organization to excite the media. Surprisingly, WTO did not protest, so we kept the name,” said Professor Sim in his address to CFA members on 12 November.

The social entrepreneurs started the World Toilet Summit in Singapore on 19 November 2001, to bring stake-holders under one roof to collaborate on inventions, projects and products.

It aims to create wider awareness of the issue, to stimulate dialogue about sanitation and bring to the forefront the health and emotional aspects of the problem as well as the economic impact of inadequate sanitation.

Since then, more than 6,000 del-egates have attended the annual summit held in major cities world-wide, including Singapore, Seoul, Taipei, Beijing, Belfast, Moscow, New Delhi, Macau, Hainan, Philadelphia and Solo (Indonesia).

World Toilet Summit 2014 will be held in January 2015 in Delhi.

TT

At CFA Singapore’s Social Enterprise Investment event on 12 November, founder of World Toilet Organization, Professor Jack Sim, urged CFA members to make time outside the accumulation of financial wealth to live more meaningful lives by changing society for the better.

Professor Sim started as many as 16 businesses in 16 years. These included the Australian International School at Lorong Chuan which had 3,500 students when it was sold, real estate businesses and the biggest brick factory in Malaysia (at the time it was sold). At the age of 40, the serial entrepreneur decided he was rich enough to retire and to devote the rest of his life to social work.

TOILETS FOR THIRD WORLD PEOPLESThat led to businesses that end poverty


They are expected to borrow from micro-financing companies.

“Toilet making is a sustainable business. We started it in Cambodia in 2010, and replicated the micro-franchise in India, Indonesia, Vietnam and South Africa,” said Professor Sim.

In 2011, SaniShop became a Clinton Global Initiative commitment with endorsement from former US President Bill Clinton’s Clinton Foundation.

INVEST IN THE BASE OF THEPYRAMID

There are four billion people out of the 7.1 billion world population that are not part of our ‘normal’ economy of consumers, producers, employees and entrepreneurs.

These 4 billion people from emerging economies are usually not of economic interest to people in relatively developed economies because it is difficult to distribute products and services where the tarmac ends. These are areas where there is little electrical, water and sewage facilities, as well as logistics, warehousing and financing support.

Termed as being at the ‘base of the economic pyramid’, these people are found in India, parts of China, in ASEAN countries, Africa and Latin America.

This annual event is jointly organized by a host government and WTO. Countries that have hosted the event include South Korea, Taiwan, China, Ireland, Russia, India, Macau, USA, South Africa and Indonesia.

IMPROVING THE LOT OF TOILET CLEANERS

In 2005, the social entrepreneurs started World Toilet College to promote best practices and standards in toilet design, cleanliness and sanitation technologies through training and capacity-building courses, in both rural and urban contexts.

It trains toilet cleaners in both cleaning and performance of small repairs, providing them with the opportunity to master a profession while at the same time enhancing their productivity.

HELPING RURAL FOLK BUILD THEIR OWN TOILETS

WTO teaches people to set up small factories for producing and selling toilets using capital of only US$2,000. Toilets are made of locally welded steel moulds based on IDEO design, cement, sand, gravel and water.

Every time a toilet is sold, the end user pays US$45 to get proper sanitation for his family. The small family enterprise manufacturer makes US$5 and the salesperson (usually a housewife) a commission of US$2.

Training for setting up a toilet factory is conducted by WTO’s SaniShop and made available free of charge to attendees. Training is funded by donors but neither money nor toilets are handed out free of charge to the attendees.

Professor Jack Sim (left) receiving a certificate from former President Bill Clinton acknowledging World Toilet Organization had been adopted as a Clinton Global Initiative commitment.


Yet, it is this very group that will become the emerging middle class. Multinational companies know this, and are interested in the base of the pyramid market. The problem is they do not know how to do ‘last mile distribution’, where lack of infrastructure results in significant inefficiency in the supply chain.

Social entrepreneurs know how to do ‘last mile distribution’, but they are very small.

SOCIAL ENTERPRISE CHALLENGES

Organizations that propose social enterprise solutions after doing research such as varsities and the World Economic Forum often file away their findings without follow-up action.

Development banks have funds for social enterprises, but only lend to governments. Access to funding is often plagued by bureaucracy and corruption.

Non-government organizations and social entrepreneurs avoid working with each other because of an inherent fear that if the other party gets to know their donors, the donation sum received will be diverted to the other party.

“Charities can be for disaster relief, environmental protection or human rights. However, charity becomes destructive if it distorts the free market pricing mechanism. For example, when the market price is zero, no entrepreneur can compete. When no entrepreneur can compete, no jobs can be created. People continue to be poor.“

A donation should only be made if it gives people the capacity to help themselves. It is good if you are paying for training, or for market infrastructure to be built. Instead of paying for them to eat for a day, you should teach them to fish.

“If you see the base of the pyramid as 4 billion potential customers, then you won’t approach them as recipients of charity,” said Professor Sim.

What this also means is that there is great profit in cutting waste.

BUSINESS THAT ENDS POVERTY

To promote business that ends poverty, Professor Sim set up BoP Hub, a social enterprise operating out of Singapore to aggregate and scale up the best models across sectors and industries, and facilitate collaboration to cut wastage in the supply chain.

In August 2014, BoP HuB held its inaugural World Convention & Expo, a conference that facilitated high-level discussions between the public and private sector to address the challenges at the base of the pyramid. Conference sponsors included big names like the Rockefeller Foundation, Gates Foundation, Clinton Global Initiative, DBS Bank, and the World Bank, among others.

Jack Sim is a leading social entrepreneur and sanitation advocate who broke the taboo around toilets by bringing the sanitation crisis to the global media spotlight.

In 1998, he established the Restroom Association of Singapore (RAS). This was soon followed with a global body on sanitation – the World Toilet Organization (WTO) in 2001. Today, WTO is a growing network of 235 organizations in 58 countries.

Sim pioneered the creation of a game-changing social enterprise – SaniShop in 2008. In 2011, Sim created another milestone for WTO and Singapore by being the first Singapore-based non-profit organization to create and implement a Clinton Global Initiative (CGI) commitment.

In 2013, Sim worked with the Singapore Ministry of Foreign Affairs to table a resolution titled ‘Sanitation for All’ at the United Nations General Assembly to designate 19 November as an official UN World Toilet Day. On July 24 2013, the resolution was adopted by consensus and was co-sponsored to more than 100 countries.

Professor Jack SimFounder of World Toilet Organization


EVENTSQUARTER 4, 2014

EVENT INVESTMENT FUNDAMENTALS FORUM PART 9 – ASSET ALLOCATION

DATE 2 OCT 2014

SPEAKERS CHONG YOON-CHOU, CFA S K SELVAN, CFAARUN KELSHIKER, CFAHOU WEY FOOK, CFA FREDDY LIM

This final instalment of the forum series focused on asset allocation. Mr SK Selvan, CFA shared his insights on economic cycles and asset classes. Mr Chong Yoon-Chou, CFA spoke on portfolio management. The event concluded with a panel discussion on asset allocation.

EVENT INVESTING OPPORTUNITIES IN THE U.S. NET LEASE REAL ESTATE MARKET

DATE 9 OCT 2014

SPEAKER RALPH CRAM

This event was proudly sponsored by Envoy Net Lease Partners, LLC. During the presentation, Mr Ralph Cram shared with members on the various investment opportunities which are available in the U.S. Net Lease Real Estate Market. Copies of “The Little Book of Triple Net Lease Investing” by Jonathan Hipp were presented as prizes to winners of a lucky draw held that evening.

EVENT ADVANCED FINANCIAL MODELING SERIES

DATE 13 and 14 OCT 2014

SPEAKER HAMILTON LIN, CFA

This workshop series was conducted at the M Hotel Singapore by Hamilton Lin, CFA.


EVENT 5 WAYS TO UNLOCK TRUE INFLUENCE FROM THE INSIDE OUT

DATE 23 OCT 2014

SPEAKER PETRINA KOW

It was an informative and fun evening as Ms Petrina Kow shared her insights on how members can uncover the secrets to unlocking their true influence from the inside out.

EVENT ADVANCES IN STRATEGIC ASSET ALLOCATION

DATE 20 OCT 2014

SPEAKER PROFESSOR RALF ZURBRUGG

This workshop was conducted at the M Hotel Singapore by Professor Ralf Zurbrugg.

EVENT CAREER DEVELOPMENT INSIGHTS – PANEL DISCUSSION

DATE 25 OCT 2014

SPEAKERS ARUN KELSHIKER, CFAMOHAN SUBBIAH, CFAVINCENT KOK, CFATOLMAS WONG, CFAKANOL PAL, CFAVICTOR ONG, CFAVINEET VOHRA, CFA

Participants of this career development event learnt how the CFA Charter can help advance their career. Panelists shared how to approach and plan for a career within the portfolio fund management, investment research or wealth management industries as well as the typical opportunities and career prospects which are available.

EVENT EVALUATING "QUALITY" INVESTMENTS IN CHINA'S DYNAMIC MOBILE INTERNET INDUSTRY

DATE 5 NOV 2014

SPEAKER YUE YAO

This presentation by Mr Yue Yao provided an in-depth analysis of “quality” for firms in the mobile Internet service industry in China.


EVENT EXPLORING LIQUID ALTERNATIVES

DATE 7 NOV 2014

SPEAKER MARIE CARDOEN

This presentation by Ms Marie Cardoen reviewed the trends in the alternative investments industry and the role of liquid alternatives in client portfolios.

EVENT MASTERCLASS: EXCELLENCE IN MERGERS & ACQUISITIONS

DATE 6 & 7 NOV 2014

SPEAKER ARVIND MATHUR, CFA

This workshop was conducted at the M Hotel Singapore by Mr Arvind Mathur, CFA

EVENT SUPERIOR EQUITY AND CREDIT INVESTING THROUGH SUPERIOR CREDIT ANALYSIS: 150+ YEARS OF CROSS-CAPITAL INVESTING

DATE 11 NOV 2014

SPEAKER JOEL LITMAN, CFA

This presentation by Professor Joel Litman reviewed advanced cash flow analytics, balance-sheet evaluation, and enhanced fundamental analysis that leads to a far better understanding of credit risk.

EVENT UNLEASHING OPPORTUNITIES AT THE BASE OF THE PYRAMID

DATE 12 NOV 2014

SPEAKER PROFESSOR JACK SIM

This presentation by Professor Jack Sim shared his insights on the challenges and opportunities of the concept of the base of the pyramid. He also addressed how an ecosystem approach empowers communities by providing trade and job opportunities to alleviate poverty.


EVENT ‘OFFSHORE’ JURISDICTIONS - NOT A PALM-FRINGED ISLAND FAR FAR AWAY

DATE 18 NOV 2014

SPEAKERS GLEN CHEEDR ANGELO VERNADOS

During this event, Dr. Angelo Venardos and Mr. Glen Chee revealed the reality of offshore jurisdictions and the implications of the new regulatory environment.

EVENT NETWORKING DRINKS

DATE 13 NOV 2014

SPEAKER NA

Members were treated to good food and drinks at the monthly networking drinks session.

EVENT GUIDED EXHIBIT TOUR – DA VINCI: SHAPING THE FUTURE

DATE 20 NOV 2014

SPEAKER NA

Members participated in an exclusive guided tour to view the original masterpieces from one of the world’s most celebrated geniuses, Leonardo Da Vinci, shown in Southeast Asia for the first time at ArtScience Museum at Marina Bay Sands.

EVENT CFA SINGAPORE – NBS EVENING PARTNERSHIP SERIES: ASIAN ECONOMIC OUTLOOK 2015

DATE 28 NOV 2014

SPEAKER MANU BHASKARAN, CFA

The speaker addressed the uncertainties in the global economy as well as the impact of these uncertainties on Asian economies. He also shared on the domestic challenges within Asia.


EVENT CHARTER RECOGNITION CEREMONY

DATE 4 DEC 2014

SPEAKERS ALEX TANSHARON CRAGGS, CFA

This ceremony recognized those who have been awarded the CFA charter this year.

EVENT CFA SINGAPORE VOLUNTEER INFORMATION SESSION

DATE 3 DEC 2014

SPEAKER BRENDA HOU, CFA

Ms Brenda Hou, CFA, from the CFA Institute made an introduction to CFA Institute and the types of resources which are readily available. Mr Arun Kelshiker, CFA, along with active volunteers of the Society, provided an overview on the available types of volunteer opportunities.

EVENT FROM SHAREHOLDER’S VALUE TO SHARED VALUE

DATE 10 DEC 2014

SPEAKER CALVIN CHU

Using real case studies, this presentation by Mr Clavin Chu examined how the practice of Shared Values breaks the perceived trade-offs between corporate social responsibility and shareholder value.

EVENT YEAR-END PARTY

DATE 18 DEC 2014

SPEAKER NA

Members were treated to good food and drinks as they ushered in the arrival of 2015.


(IBF Level 1 & 2)

CFA SINGAPORE

RESEARCH PROGRAMME*

The CFA Singapore Research Programme (IBF Level 1 & 2)helps prepare young professionals and graduates for entrylevel research analysts’positions.

It is ideal for graduates seeking employment and a career ininvestment research or a related field as they work towards agoal of attaining the CFA and b e c o m i n g a n IBF-certifiedpractitioner.

MINIMUM ADMISSION REQUIREMENTS

Bachelor Degree or the equivalent. Applicants are required to submit their University transcripts.

INCORPORATES THE PREPARATORY COURSE FOR THE CFA LEVEL 1 & 2 EXAMINATION

ABOUT CFA & IBF Standards

The Chartered Financial Analyst (CFA) Program is a globally recognized, graduate level curriculum that provides

a strong foundation of real-world investment analysis and portfolio management skills along with the practical

knowledge you need in today’s investment industry. It also emphasizes the highest ethical and professional

standards.

The IBF Standards (previously the Financial Industry Competency Standards or FICS) represent a set of

competency standards developed by the industry, for the industry. It provides a practice-oriented development

roadmap for financial sector practitioners to attain the necessary training to excel in their respective job roles. The

Research job role refers to the conduct of fundamental analysis on companies globally, providing institutional and

retail clients with industry-specific and in-depth research and analysis on diversified industries.

For more information, please call us at 6323 6209 and email us

[email protected]

* Funding is available upon criteria fulfilment


The CFA Singapore Quarterly features the latest in thought leadership, best practices and investor education activities of investment professionals

in Singapore. Written by financial journalists for veterans as well as those aspiring to greater heights as an investment professional, this quarterly

newsletter commissioned by CFA Singapore is produced by NextInsight (www.nextinsight.net) and circulated to about 10,000 CFA charter holders

.and program candidates. Email or call Sim Kih ( [email protected] ) at 6438-2990 for feedback and inquiries.

Date Details Speaker Venue

27 Jan Quantitative Easing and Its Aftermath Verma Pradeep, CFA University of Chicago-Booth

27-28 Jan Investigative and Forensic Accounting Certification Mr. Michel Herrmann Concorde Hotel

3 Feb The Science of Money Prof Steven Kou Capital Tower

3 Mar Game Theory - Predicting Behavior Patrick McNutt Manchester Business School, S’pore Centre

4-5 Mar Masterclass: Excellence in Mergers & Acquistions Arvind Mathur, CFA TBA

10-11 Mar Psychology Behavior and Performance Lim How TBA

23-25 Mar Advanced Financial Modeling Series Hamilton Lin, CFA TBA

26-27 Mar Effective Presentation For Finance Professionals Alex Tan / Alicia Altorfer TBA

20-21 Apr Asia Real Estate Investment & Finance Roy Ling, CFA TBA

23-24 Apr Global Risk Management for Banks TBA

8 May Business Valuation Workshop Ong Woon Pheng, CFA TBA

3-4 Jun Behavioural Finance Workshop Frank Ashe TBA

6-8 Jul Mastering FX Options Workshop Dr Izzy Nelken TBA

9-10 Jul Fixed Income: Trading and Arbitraging the Yield Curve Dr Izzy Nelken TBA

23-24 Jul Treasury Risk Management Workshop Lawrence Ho TBA

4-5 Aug Investment Risk Management Frank Ashe TBA

CalendarCalendar of upcoming events

Documents

CFA CHARTER AWARDS CFAS Newsletter v21Jan - lo-res.pdfcompetence conducted by Dale Carnegie Training consultant Alex Tan. He noted the importance of paying sufficient attention to