CFA Russia Society - Quarterly Bulletin (№1/2014)

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CFA Charter Awards Ceremony at Soho Rooms Club

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CFA Mock Exam at Moscow State University


Award for “Adherence to high standards of business ethics in the finance market”


Summer party at Don’t Tell Mama Club


Presentation and webinar for students of the RPANEPA: how to become a CFA and where to start


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CFA Institute: changes in monetary policy are the main factor of concern Situation in Russian banking system – opinions of market participants

PROJECTS Association (Russia) 10 CFA participates in GIFA events Night: “Moscow human and 11 Debate intellectual potential: competitive advantage or illusion?”

Competition: 12 Student CFA Institute Research Challenge


14 and Eastern Europe Investment Conference 16 European 2013: from cautious optimism up to Investing into Central

forecasts of financial disaster

EDUCATION business 18 Master-class: evaluation methods Financial Modeling of 18 Training: Investment Projects How to detect financial 19 Course: statement manipulations?

Moscow, one of the greatest cities in the world, has untold potential for growth... ALAN MEDER

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CFA CHARTER AWARD CEREMONY at Soho Rooms Club Over the past four years, many investment professionals have joined CFA Association Russia: Years

Number of new members









The Charter Awards Ceremony took place at Soho Rooms Club on the 16th December, and honored 94 new CFA certificate owners.

On December 16, 2013, long-awaited CFA charters were awarded to new charter holders by by Vladimir Potapov, CEO of “VTB Capital — Investment Management”. Vladimir Potapov, who is a chartered financial analyst himself, heartily congratulated the heroes of the evening with a well-deserved end of their difficult but very important journey of becoming true professionals in the finance industry. On behalf of the CFA community, new charter holders were greeted by Vladimir Tutkevich, executive director of CFA Association (Russia). For every new charter holder, this journey has taken from 3 to 6 years. According to other analysts, CFA preparation gave them an opportunity to gain new knowledge and skills as well as to sys-


tematize effectively what they had already known. Moreover, from now on

all newly certified CFA holders, being high-level professionals, can apply for prestigious jobs in the best financial structures in the world and look to the future with confidence, regardless of their circumstances. After the official ceremony, the evening continued in the atmosphere of informal communication with colleagues. It seems that some new holders of the “sacred” certificate have already made a decision about a further step in their promising career.

CFA Charter inspires confidence with regard to future career

CFA Mock Exam at Moscow State University On November 23rd CFA Association (Russia), in cooperation with Kaplan Schweser, held the CFA Mock Exam in the main building of Faculty of Economics of MSU. Because we normally observe a small number of registrations for our Autumn CFA Mock Exam session, only 90 CFA candidates registered for the Mock Exam. However, smaller number of participants does not mean a relaxed and easygoing atmosphere in the exam room; our staff members performed the roles of exam proctors and ensured that the Mock Exam followed the official exam protocols. Every participant had an allocated seat in the examination hall, the timing and schedule was followed very thoroughly, and candidates were unable to check exam questions before the exam session started.

Both sessions of this year's Mock Exam were organized with support of the Centre of Applied Financial Research, Faculty of Economics of the Moscow State University, which provided CFA candidates with comfortable and easily accessible facilities for the Mock Exam. We wish good luck to all candidates who took the CFA Exam and welcome everyone to join our young and ambitious community of finance and investment professionals.

Mock Exam benefits One of the main differences between mock and actual exams is that Kaplan Schweser provides every candidate with Answer Keys for self-grading as well as with access to Kaplan online services. This gives the participants of the Mock Exam the following benefits: Individual exam score; Complete answer explanations; Ability to compare Individual scores with the scores of other candidates; Learning Outcome Statement reference guide based on the CFA Institute and SchweserNotes™ texts.




On October 15th, 2013 CFA Association (Russia) held a webinar presentation on the advantages and the ways of undertaking the CFA exams in Russia.

Many students of the Finance Department of Russian Presidential Academy of National Economy and Public Administration (RANEPA)

Vladimir Tutkevich, executive director of CFA Association (Russia) and Anton Shpuntov, CFA, investment professional with extensive experience, covered the following aspects:

are planning to become investment professionals and dream of being in a CFO/CIO, a risk manager or a portfolio manager career.

Why is the CFA Charter considered as the "gold standard" for investment professionals?

That is why CFA Association (Russia) and RANEPA - the MS in International Finance program, organized the presentation and Live Webcast on the topic: “How to prepare for the CFA exam in Russia, and what advantages it will bring�.

How does one prepare for CFA exam in Russia?


How can a CFA Charter help advance your career?

CFA Association (Russia) thanks the Russian Presidential Academy of National Economy and Public Administration for taking the initiative to introduce the CFA program to its students.

Future investment and finance professionals expressing interest in the CFA Program

Award for

“Adherence to high standards of business ethics in the finance market” On Tuesday, September 10, “Et Cetera” Theater held the official meeting dedicated to the Day of the Financier, supported by the Finance Ministry. The best financial professionals who made a significant contribution into the development of our country were honored with the “Reputation of the 2013 year” Award.

According to CFA Association, the winner of the nomination “Adherence to high standards of business ethics in the finance market” has been Mr. Richard Hainsworth, CFA, CEO of Universal Credit Rating Group in Hong Kong, and CFA Association Member of Board of Directors.

The “Reputation of the 2013 Year” Award had an official support from the Ministry of Finance of the Russian Federation; in particularly from the Minister of Finances of the Russian Federation Anton Siluanov. At the ceremony there were over 500 famous and authoritative representatives of the Russian finance market, public figures, scientists, legal and government organizations.

2013 YEAR laureate

2013 year laureate, Richard Hainsworth, CFA. Richard Hainsworth, 2013 year laureate, Bachelor of Chemical Technology Sciences (Imperial College London), Master of Economics (The Centre for Russian and East European Studies University of Birmingham), has been living and working in Moscow since 1982 and has been studying Banking since 1992. In 1996 he was appointed the representative of Thomson Bank Watch. In 2001 Mr. Hainsworth opened his own National Rating Agency “RusRating”, supported by Citibank, where he held the chair of Credit Risk Management Department Vice President. At the moment, Richard is CEO at Universal Credit Rating Group in Hong Kong.



Summer party at Don’t Tell Mama Club On the 14th of August, CFA Association partnered with the BizFamily to hold the Summer party for CFA candidates and charter holders in one of Moscow’s trendiest clubs The Chef at Don’t Tell Mama is the famous Argentinian Adrian Ketglas, who opened his first bar at the age of 18 and received Michelin Red Guide Start in 2005. He created more than just a menu for Don’t Tell Mama – he created a true piece of art, which took the CFA community to an amazing gastronomical journey. The Bar is managed by British Beck Narzi, the graduate from United Kingdom Bar Academy. More than 170 people visited that event and enjoyed the sophisticated cuisine and the interactive focus of the party. It was a great celebration for all those who took their CFA Level 3 exam – the results of which were disclosed on August 7.


Through the use of our innovative mobile application, everyone at the party was able to see all participants and could invite them to chat and exchange business cards.



changes in monetary policy are the main factor of concern A survey, conducted by the CFA Institute among organization's members, has shown that possible monetary policy changes are now the main factor of concern on the market.



4­­-5 ­­ 60­% %

38­ 31­% %

of respondents think that the main issue centers around the phase-out of the monetary easing program. 35% of participants believe that this factor is, first and foremost, the economic slowdown in China. The third most popular response was growing bond yields (33% of respondents), which closely correlated with concerns about monetary policy. Respondents could choose several factors at once, and that is why the final sum exceeds 100%.

premium for the share capital risk for the nearest 12 months.

of respondents agreed that total managed assets volume using active strategies is not reasonable in terms of investment performances. It seems that active investment management loses its attractiveness.

predict “currency wars”, competitive currency depreciations by the countries.

of respondents believe that the main financial crisis lesson is unreliability of exceptional short-term planning. 25% more state that the main lesson to be learned had to do with those defects of financial markets regulation, which were indicated by crisis.



opinions of market participants

Situation in Russian banking system After the “Master-Bank” license was revoked by Central Bank, depositors became more concerned about the stability of the Russian banking system, as well as the possibility of tightening the Central Bank’s policy towards market participants. The survey was conducted by Andrey Urzhumtsev, CFA, Partner, EmCo Consulting company.

We asked experts among local CFA charter holders to comment on this situation. Vyacheslav Volkov CFA, Corporate Finance Director "Rosexpertiza"

“The banking sector is being influenced by the general poor economic climate. Reduction of investment programs leads to a drop in demand for credit. Economic crisis manifestation negatively affects the margins of real sector companies, which leads to a reduction in their credit ratings and increases competition in the banking sector for high-quality borrowers. However, despite the general economic slowdown and stagnation, the Russian banking system remains stable. Central Bank will continue tightening the work with problematic banks. Probably, we will see a few more license revocations regarding banks outside the top twenty. Nevertheless, scenario of mass license revocation is unlikely to happen in the very near future — such a step would shatter the confidence of the banking system.


In spite of relative instability of the biggest Russian banks, one of the considerable problems can lie in the situation with major infrastructure (i.e. Olympic) projects. The economics of such projects is not obvious, which may request revision of payments schedule and debt restructuring. Thus, the question of additional banking capitalization arises.”

Dmitry Ryabykh CFA, CEO Alt-Invest

“Apart from the internal problems that banks face, which are already a lot, there is also the external problem of economic stagnation an issue that leads to lower profits for companies and deterioration of the loan portfolio. Small banks face immediate consequences as their loan portfolio often consists of small affiliated companies. Seeing the inevitability of their bankruptcy, the bank owner converts the rest of the money through them, and the bank is immediately left without any means. It is hard to say how

many such banks there are in Russia, but bankruptcy will continue to happen. Major banks are more into market behavior style, even if they credit joint companies. So, in their case, we have time to forecast the upcoming bankruptcy, while both banks and government will think about bank protection. Thus, there won’t be any sudden license revocations. Even in the Masterbank situation, CB voiced the first serious public claims in August, which was three months before license revocation.

Yet the bank was only in its seventh decade of asset management,so the Central Bank position looks quite smooth and its aggressive antimoney laundering policy will hardly become a great market problem..”

Dmitry Sokolov CFA, Deputy CEO “Libra Capital” Investment Company “We are obviously now in a trend of banking sector consolidation with its cleansing of bad assets. The trend will continue next year, small and medium banks will lose licenses, but as this process is planned and controlled, chances of major bank license revocations are minimal. Most likely, we will see a growth of major banks mergers.

No doubt, such a policy raises mistrust in the interbanking sector, which can lead to a growth of interest rates.”

Timur Hirerullin Independent expert

In general, the situation with the Russian banking system doesn't seem to be critical: levels of liquidity, stability and efficiency remain acceptable. Despite high growth tempos of releasing consumer credits, the level of overdue debts of most banks is not yet so big. Nevertheless, it is most likely that cleaning Augean stables from suspicious banks, registered in early 90s, will last longer. Thus, small banks with less than a $10 mln will be constantly closing (about 20-40 banks per year).

Apparently, banks which allow withdrawsfrom abroad and cash illegal money are going to be in the risk zone with the coming of the new CB Head. In this case, it is harder to estimate the number of possible revoked licenses. For the last 6 years though, the capital outflow from the Russian Federation amounted to about $500 billion, and the shadow economy equals almost 30-40% of Russian GDP. Therefore, under strict supervision, most market players can face problems, which can hardly be covered by the means of DIA. Thus, at this very stage, the main risk for Russian banks can be regulator's acts, right in terms of goals, though false in terms of execution. At the moment, the main risk for national banks lies in the possibility of shattering people’s confidence in banks and confidence in government's support of problematic banks.”

Rodion Lomivorotov CFA, Head of Macroeconomic Analysis, OTP Bank

“Apart from a big number of internal problems that banks have, we have recently observed an external problem: economic stagnation”. “Banking sector tendencies of 2013 will continue developing next year. There will still be a slowdown in the retail sector, while corporate segment growth will continue weakly. Many retail banks will have to review their development strategy and reduce loans for high-risk borrowers, because growth of

non-payments and stricter regulations will decrease the margin in this segment. In its turn, CB Russia will continue tightening regulatory policies out of a concern for anexcessive growth of retail loans. Due to the increase in requirements, many banks will face the problem of capital deficiency and will have to attract additional funding from stakeholders; the market consolidation will continue.

One should also expect tighter controls over banking activities, mainly over their compliance to mandatory standards, as well as combatting illegal operations. Banking market cleansing will continue, but it will hardly lead to a system crisis because the cases will more than likely be individual. Recent events on the market may seem like a great experience: on one side, the regulator will act more accurately and thoughtfully; on the other, the banking market will be ready for such steps. After the banking management deals with the situation and identifies new requirements for counteragents’ reliability, the situation on the market will become more stable. Tighter controls of other financial sectors, including pension funds and insurance companies, are also to be expected.”



CFA Association (Russia) participates in GIFA events The Guild of Investment and Financial Analysts (GIFA) is a Russian non-profit organization of financial professionals.

GIFA was founded in 1998 and is a member of the Association of Certified International Investment Analysts (ACIIA) and the European Federation of the Financial Analysts Societies (EFFAS). One of GIFA's aims is to maintain contacts and professional relationships with international financial organizations. including CFA Institute and local CFA societies. GIFA invited Members of CFA Association (Russia) Board of Directors (Neil Withers, President and Vladimir Tutkevich, Executive Director) to participate in its supervisory board in 2013, for the purpose of exchanging ideas and experiences between the two communities.


The main aim of the organization is to develop ideas on improving the local financial markets and strengthening the Russian investment community. Moreover,

Association CFA (Russia) is looking forward to establishing a fruitful cooperation with public authorities and major financial market players.

At different times well-known analysts, including Alexandr Idrisov and Arkadiy Dvorkovich, have directed GIFA. Since 2014 Konstantin Korischenko has headed the Board of Directors. In 2012 -2013 - the Chairman of JSCB “Investbank”. From 2010 to 2012 – the Head of Russian branch of Bank of America Merrill Lynch. From 2003 to 2010 – the Chairman of MCSE.


“Moscow human and intellectual potential: competitive advantage or illusion?” The regular round of debates within Debate Night project took place on the 11th of December in the “Technopolis Moskva” Center on Vologogradskiy Prospekt, where CFA Association (Russia) as usual was one of the partners. The topic of the debate was human and intellectual potential in Moscow: the participants had to figure out whether this potential is a real competitive advantage of Russian capital or if it is just an illusion imposed on the society and in particular business community by state authorities, media and public opinion. Around 200 guests visited the event.

The opinion that Moscow human and intellectual capital is a competitive advantage has been supported by Dmitry Peskov, the Director of “Young professionals” department of Agency for Strategic Initiatives, Dmitry Molchanov, the General Director of state –financed entity “Moscow Small Business”, and Andrey Ivaschenko, the Board Member of non-profit organizations “Phiztech-Souz”. Their opponents have been Michael Germershausen, the Managing Director of Recruitment Agency Antal Russia, Gleb Fetisov, the President of “Green Alliance” People’s party, and Vladimir Tutkevich, the CEO of CFA Association (Russia). The discussion has been moderated by Gleb Dunaevskiy, a well-known business trainer and consultant, the Director of consulting company “Dunaevskiy and Partners”.

In general, Moscow has a strong human and intellectual potential which gives unquestionable competitive advantages in comparison with other Russian, and even foreign, business centers. As a result of the discussion, the participants concluded that in general, Moscow has a strong human and intellectual potential which gives unquestionable competitive advantages in comparison with other Russian, and even foreign, business centers. The business climate in Russian capital differs advantageously from the national average; and rich scientific and cultural traditions of the city attract Russian young intellectual and business elite, including people who for various reasons worked abroad for a long time.

Despite this, Moscow authorities must not rest on their laurels. “It is necessary to do everything possible so that Moscow will become a comfortable place not only to work but to live”, said Vladimir Tutkevich, “Moscow today is a sieve that collects the best professionals from all former Soviet Union Republics, including those who have prestigious international CFA certificates, but very often the best of them do not stay and move away from the city. It is necessary to make Moscow a more comfortable place for professionals, a place where they would like to live”.

Follow the link to watch the video from the meeting career/2013/12/10/__ Kadrovyyy_i_intyel.phtml




CFA Institute Research Challenge Competition PARTICIPANTS In 2012 and 2013, in the Research Challenge took part: 3,500 students from 775 universities and 54 countries, as well as 2,200 volunteers among industry professionals..

The Russian stage of CFA Institute Research Challenge, the Annual Global Student Competition in Investment Analysis, was launched on the 18th of November in the office of OJSC Rosnano. The CFA Institute Research Challenge is held in three stages. At the national level of competition, the teams explore and analyze a company whose shares are listed on the stock exchange. As a result of its work, each team has to present an analytical report with an explicit recommendation: ‘Buy’, ‘Hold’ or ‘Sell’ recommendations regarding shares of the target company. The team has to defend its forecasts and conclusions in front of the commission of investment experts. The winning team of each national stage proceeds to the regional stage, where it competes with the best teams from other countries in one of the three major geographic regions: North and South America, the Asia-Pacific region, as well


as Europe, Middle East and Africa. Winners of the regional stage go to the global final that defines an overall competition winner. Four years ago, CFA Association (Russia) organized the Russian stage of competition for the first time. Since then, the level of student community involvement, as well as the teams’ preparation level, has been steadily growing. Such leaders of Russian industry as “Severstal”, GMS Group and “Mostotrest” have acted as subject companies for the research.

In 2013, the Russian team of the Economics Faculty of the Moscow State University managed to participate for the first time in the global final.

This year, QIWI Company, one of the most well-known Russian brands in the sphere of newest payment technologies, agreed to become an object of research. The company manages the biggest network of payment terminals in Russia and actively develops its own electronic payment system. The company held an IPO in the year 2013, and the company's shares are traded on the NASDAQ stock exchange.

videos, presenting their research. Videopresentations are the second element to be included into general note.

Eight teams from Moscow and SaintPetersburg universities take part in the current Russian phase of competition. The teams presented their draft reports on December 10 and their final research results in mid-January, 2014. While Russian investment community experts study and evaluate reports, the teams have the task to film 10-minute

We would like to wish all participating teams luck, and thank students, their professors, as well as investment experts, who agreed to become team mentors and Russian phase judges.

Only 4 teams are going to pass the Russian competition phase, and only one of them will represent Russia on the regional stage in Milano on April 2, 2014. Global final of CFA Investment Research Challenge will take place in Singapore on the 25th of April.

Only 4 teams are going to reach the Russian competition phase, and only one of them will represent Russia on the regional stage in Milano.



Investing into Central and Eastern Europe Investment Attractiveness of Central and Eastern Europe economies has been on the rise. The participants of the conference, holding in April 2013 in press-center RIA Novosti, discussed the perspectives of investment to the region. On Monday, the 22nd of April, 2013, over 200 investment bankers, real sector businessmen, regulating representatives from Russia, Ukraine, Belarus, Poland, Czech Republic, Hungary, Romania and Bulgaria gathered in international presscenter “RIA-news”, in order to discuss investment attractiveness of countries of Central and Eastern Europe (CEE). CFA Association (Russia) acted as organizer of “Investing into Central and Eastern Europe” conference.


Heads of the biggest financial organizations participated in the conference, including Alan Meder (Head of Management Board, CFA Institute), Jorg Bongartz (Head of the Management Board, Deutsche Bank), Ekaterina Trofimova (First Vice-President, Gazprombank), Adam Robert Kvyatkovski (Vice-President, Warsaw Stock Exchange), Peter Koblik (CEO, Prague Stock Exchange), Konstantin Korishchenko (Head of the Management Board, Investbank) and many other representatives of the world business society.

The full conference agenda was divided into 7 discussion panels. Alan Meder, Head of the Management Board, CFA Institute, opened plenary sitting: “There are so many strong educational programs in Moscow, and we are glad in the CFA Institute to be part of this educational process. This is the area of the world where there are so many opportunities for financial analysts to use their talents, to assess sources and uses of financial capital. I am also very confident that the financial analysts here are among the best in the World, helping to prevent the waste of human capital, as well as financial capital, to make sure there are processes in place to prevent fraud and the waste of capital.”

Deutsche Bank Head of the Management Board Jorg Bongartz announced company’s strategy: “Today we are observing the weakest situation in Western Europe, which makes many companies review their strategies, and that shifts the focus onto CEE countries”, marked Jorg. “Nowadays, Deutsche Bank strategy is divided into following directions: first, we want to remain corporate investment bank in CEE regions, and Russia remains priority market for us. Second, we are going to grow infrastructural platforms, in order to provide service for the whole Deutsche Bank Group.”

In terms of discussing investment climate and CEE countries attractiveness, Alexander Murychev, Executive Vice-President of Russian Chamber of Trade and Commerce, spoke out his point of view: “To my mind, conference organizers were absolutely logical that we should find positive signs in today’s recessionary symptoms, which we observe now in CEE countries’ economies. There have always been efficient ways out, and we should use new opportunities to develop bilateral and multilateral relationships between Russia and CEE countries. Let’s say, events in Cyprus have already stimulated many investors to reallocate assets into CEE countries. From the other side, Russia wields a large investment market, opportunities and brightening conditions. A major tax preference project on the Far East, implying zero dues and profit taxes, will be implemented in 2014.” One more important question, discussed at the meeting, became debt markets and diversification opportunities for international investors. In terms of her speech, Ekaterina Trofimova, first VicePresident, Member of the Management Board of Gazprombank, remarked: “Traditionally, foreign investor’s interest in CEE region shows itself towards most liquid markets in terms of investment opportunities, which they are offering. In general, CEE region continues having moderate debt burden; opportunities for developing debt market are

serious, so default level, which we observed during the crisis, is insignificant. Exchange rate volatility became moderate during the last years”, outlined Ekaterina. “To my mind, economic slowdown is connected with technical development slowdown, which accumulated from early 2000s. If we close this gap, growth perspectives will open. Gazprombank sees separate opportunities for investing into the region, as further development in terms of regulation remains unanswered. Isolated investments are the most attractive if speaking about efficiency, return, management and transparency.”

“Nowadays, the large part of investors invests globally. In this purpose, some local attractiveness, local “gingerbreads”, of course, come around, but, in fact, almost every good idea of raising attractiveness of a particular market is simultaneously picked up by other countries, and finally, this or that advantage no longer exists”, marked Konstantin Korishchenko, Head of the Management Board, Investbank.




from cautious optimism up to forecasts of financial disaster On the 6th European Investment Conference, held by CFA Institute in London on November 14-15th, 2013, the calming tone of European financial market regulators mixed up with warnings from investment experts. While European Central Bank (ECB) representative tried to assure conference participants that its measures on stabilizing economies started bringing considerable results, many presenters among market representatives didn’t hide their skepticism.

Reasons for optimism Author: Andrey Urzhumtsev, CFA

According to Yves Mersch, member of ECB Management Board, calmness and confidence are now returning to European capital markets. He says, “They managed to stop a chain reaction of financial crisis in EU, which is indicated by foreign capital inflow to Eurozone countries from abroad, as well as by decline in financial fragmentation of Eurozone economies.” Mersch believes that recent measures, aimed at eliminating weaknesses in the structure of European monetary union, brought some success. Thus, resulting from fiscal policy reforms at the level of individual countries, Eurozone budget declined to 3.1% GDP. For reference, this indicator equals 5.8% in the USA and exceeds 9% in


Japan. Moreover, Eurozone debt to GDP ratio amounts 96%, while in the USA and Japan it equals 106% and 244% respectively. The ECB representative assured that plans on strengthening banking union in Eurozone would ensure necessary integration in the banking sector, so that game rules are unified for everyone regardless of borders. In particular, Mersch mentioned plans on implementing a single supervisory mechanism, as well as a unified one to address crisis situations in individual European banks. Mersch described the main ECB priorities for the next year as risk assessment in the banking system, quality of bank assets and stress tests designed to determine the extent to which banks are able to cope with external economic shocks. According to him, working in this direction will help to restore investors’ trust in the Eurozone banking sector, raise its transpar-

ency and smooth out funding costs differences between banks of the biggest and periphery European economies. Mersch emphasized that aa decrease in borrowing costs already concerns not only sovereign borrowers, but also the private banking sector in Eurozone. However, an ECB Management Board member remarked that there's much to be done in order to overcome crisis consequences in Eurozone and prevent similar disasters in the future. First of all, he says, it is necessary to restore real sector crediting as the main priority in European banking activity. Mersch also pointed out the need of strengthening the role of capital markets, particularly recovering securitization market, in order to provide small and medium businesses an access to financing.

Vigilance of market participants The ECB representatives' tone has highly contrasted with the picture, described by David Kelley, Chief Strategist of JP Morgan Asset Management, CFA. He directly refused to admit ECB’s merit in balancing European economy. According to him, it happens more in spite of than thanks to ECB efforts

Kelley advised regulators to facilitate trust on the financial market, instead of pumping up market liquidity. It’s worth mentioning that the MEP Phillip de Baker agreed with Kelley, having posted in his Twitter feed that those who make decisions in Europe should get acquainted with this strategist’s presentation. James Rickards, a Tangent Capital Partners Executive, appeared to be even more cautious towards regulators’ activities. The expert complained that

more and more countries are involved in the "currency war" — the depreciation of their currencies with the aim to drive economic growth.

with each other, but coordinately devaluating their currencies — dollar, euro, yen and pound sterling — against developing countries’ interests. In accordance to his logic, developing countries have to print money, in order to somehow keep exchange rates, importing inflation from developed countries by that means. Rickards emphasized that currency devaluation is consciously used by regulators to exit the structural depression; as interest rates approached zero, currency depreciation became an additional instrument of monetary smoothening. He says, ”there’s still a balance between defliatory pressure from reducing the crediting level in the world economy from one side, and inflation pressure of the printing press from the other one.” At the same time, this process can easily go out of the control and end up with financial system collapse, assures the expert. Rickards marked that most insightful investors are already preparing for a disaster, investing in real assets. As an example, the expert cited a recent large-scale purchase of gold made by China, as well as the acquisition of Warren Buffett share in the railway business. Rickards also offered his vision for how the government will react disorders,

which will inevitably follow the financial system collapse. “Wait for tough reaction. I would describe it as neo-fascism”, said Rickards. Dylan Grice, Head of Research, Edelweiss Holdings, also added skepticism, sharing observations with respect to world major central banks over the past three decades. According to him, financial engineering, the aim of which was largely to control inflation, led to a problem of another kind — "credit inflation", which contributed to the loss of money in an important part of their role in society. He says, it became less popular to save money than to spend them in developed countries, and now we are facing consequences of this cultural shift.

As Grice assures, money serves not only as a unit of exchange or preserving value, but also as an important element of trust in the society. Money games, which involve central banks, shatter confidence, says the expert.

According to Rickards, two currency wars have already happened in the 20th century, the first one — in 1921-1936 and the second one — 1967-1987. Both these periods were characterized by competitive currency depreciation of developed countries. Rickards says that the current currency war differs from previous ones because now developing countries are not competing




business valuation methods On Thursday, the 3rd of October 2013, CFA Association Russia held an intensive master-class regarding "Business valuation methods using financial models". For the first time it took place at the ATC International Moscow office. Many people know that this is the name under which one of the most popular CFA Russia trainings is held several times per year. Unfortunately, not everyone can attend it: the training has a cap on the number of participants, lasts all weekend long, and has a cost constrain to some potential participants. CFA Association Russia understands these constraints, and so for the first time since the launch of the popular training, CFA Association Russia invited everyone to the master-class.

Unlike the "main" training, the master-class was not followed by the award of certificates. But during the 1 1/2 hours the participants refreshed their skills of investment analysis and summarized knowledge, speaking on such topics: Main valuation methods (DCF, Comparative, Replacement) Links between financial analysis and forecasting realized in financial model Methodology and application of FCFF, FCFE, EVA, Abnormal Earnings methods Comparative valuation. Key issues, advantages and disadvantages of the method. Commonly used financial and operational multipliers Issues associated with the accounting and forecasting of reserves (provisions) and deferred taxes


Financial Modeling of Investment Projects Professional development and continuous education are the key spheres of activity of CFA Association (Russia), and we are aspiring to provide the most up-to-date and relevant financial modeling and business valuation courses to members of the CFA community in Russia. Our training sessions usually run all year round with a short summer break, and offer intensive two-day classes at convenient and central locations in Moscow. On 30 November – 1 December we ran one of our newer trainings — Financial Modeling of Investment Projects. This


training focuses on development and operation of dynamic and error-free financial models that evaluate all stages of the project management. This training was delivered by two of the most outstanding members of CFA Association (Russia): Dmitry Ryabikh, CFA and Mikhail Panfilov. This time the participants of the master class included 10 professionals representing such companies as Vneshekonombank, RUSNANO, Sovkomflot and others.

Dmitry Ryabikh has over 17 years of experience in the fields of financial analysis and planning, authored a number of methodologies and software packages in project and audit management and runs over 20 commercial valuation of project trainings a year. Mikhail Panfilov is working at the Finance Division of Sberbank. Mikhail has been an assistant lecturer with us since 2012 and his teaching methods constantly receive only the highest praise.


How to detect financial statement manipulations? CFA Association (Russia) organized the intensive course for financial analysts “Detecting financial statements manipulations and analyzing real financial business situation� which took place on the 14th-15th of December on Kalanchevskaya Street in Moscow. Course instructors were Konstantin Zusmanovich, corporate and banking finance expert (with more than 15 years of experience), CFA & FRM candidate, PMI & GARP member, and Yulia Barmina, corporate and banking finance expert (with more than 12 years of experience) and GARP member. During two days, professionals in financial analysis studied both well-known and potential manipulations with corporate statements, as well as simple mistakes of financial directors, which distort real situation in the company and can influence its evaluation. The course also included such

issues as signs of unreliable information in an enterprise balance, income statements and cash flow statements. Documents, used within the course, covered three current most popular standards: RAS, IFRS and US GAAP. The most important though became practical part of the course, during which participants got an opportunity to test acquired knowledge, consider typical errors, estimate the mastership of corporate manipulators on real examples, as well as the capability to deal with thinlyveiled tangles of financial reporting.

The most important though became practical part of the course.

If you wish to contribute your article, analysis or educational materials, please contact us at


CFA Association (Russia) is inviting investment professionals to attend three intensive courses, which have already been completed by more than 300 of your colleagues.


• How to build dynamic financial models that reflect all project parameters

• Structure and format of the project's financial statements

• Features associated with the planning of income, expenses, investments, fiscal charges and other components

• Models of the economic and fiscal environment/ Accounting for inflation and price fluctuations

• Model structuring based upon the practices of the leading investment banks

• Several techniques for the building of complex models PARTICIPANTS WILL LEARN:

• How to manage capital budgets through turnover cycles

Indicators of project effectiveness: use of MS Excel formulas and self-construction of indicators.

• Calculation of solvency indicators and their use in the planning of the project finance structure.

How to create simple, understandable and error-free financial models in Excel.

• Cash flows statement/ Criteria for the selection of a modelling approach, correlation with the history of company's activity

• How to check the model for possible errors




• Building a comprehensive financial model from scratch. Purpose and objectives of a financial model

• Main valuation methods (DCF, Comparative, Replacement)

• Structure and logic of financial model building in MS Excel. Basic modeling rules in MS Excel • Links between financial analysis and forecasting realized in financial model • Analysis of historical information and defining of the model's key drivers • PL forecasting: Revenue, COGS and SGA, fixed/variable cost split


How to determine the value of a business, on the basis of historical data and other factors, by using a variety of valuation methods..


• Forecasting of Fixed Assets, capital expenditures and depreciation, working capital • Forecast of the income tax, property tax and turnover as to VAT • Link between PL, BS and CF. Model balancing • Review of several industry specific mod els, VC and PE models, Project Finance models

• Purposes, users and structure of financial reports • Purposes of manipulation and three levels of "manipulators'" professionalism • Interrelations of financial statements as the first step to data validation • Balance Sheet analysis • Profit and Loss Statement analysis • Cash Flows Statement analysis • Errors and manipulations occurring in groups’ consolidated financial statements


• Simulation analysis

• The concept of Enterprise value, the components of this concept • Theoretical foundations and various applications of DCF methods • Methodology and application of FCFF,

FCFE, EVA methods of valuation

• Methodology and application of Abnor mal Earnings method • The discount rate WACC – methodology of calculations for Russian companies • Comparative valuation. Key issues, advantages and disadvantages of the method • Commonly used financial and operational multipliers • Issues associated with the accounting and forecasting of reserves (provisions) and deferred taxes.

• Comprehensive financial analysis of business, detection of inconsistent and incorrect information, assessment of the business's real state •

Common mistakes of analysts during calculation, comparison and practical interpretation of ratios

• Final workshop on the detection of manipulation and complex analysis of the business's financial condition

The workshop is built on real-world examples.

Victoria Pavlova