exclusive iInterviews
Your voice articles by UCL students
Year in Review
highlights
The Pinnacle issue 2016-2017
A UCLU Investment Society Publication
EDITOR ’S NOTE INTERVIEW Dear Reader, True to its tradition, UCLU Investment Society presents you with our latest edition of the annual magazine - The Pinnacle. Over the past few years, the magazine has constantly been a source of insights and information about the financial industry. This year we have conducted interviews with various representatives from a range of companies and organizations. In addition, we have received remarkably well-crafted articles from three UCL students. 2016 was a year marked by pivotal events such as Brexit and the US elections, and we hope to provide you with advice from experienced graduate recruitment managers as well as individuals in the finnacial industry to enrich your knowledge of how to navigate the current job market. Through this magazine, along with every event that we organize, we wish to provide you with a beacon of light on your journey to the pinnacle of your career. It has truly been an incredible journey and a great honour to create this magazine for you. All of this would not have been possible without the unconditional support from each and every member of the UCLU Investment Society Committee. Happy reading! Yours sincerely, Selina Ko Chief Editor of UCLU Investment Society 2016-2017 THE PINNACLE | 2016-2017
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CONTENTS
CONTENTS A UCLU INVESTMENT SOCIETY PUBLICATION 5-6 Interview with hiredgrad 7-9 Venture Capital society - creation of a movement 10-12 A Chat with Terri Loksa, director at Dartmouth Partners 13-14 Year in Review 15-16 Did you know? 17-19 interview with Selin Yanyali 20-21 A Minute With HSBC 22-24 Working at Mazars as an Investment Analyst 26-28 Interview With Factset 29-31 Interview with Credit Agricole 32-33 The Origin and Future of Abenomics - by George Birt 34-36 Chinese Bubble on the Edge - by Billy Hao AND Sheng-Yi Wang 37-38 From Black Gold To 21st Century - by Andrej Bacholdin 39-46 highlights from this year’s events THE PINNACLE | 2016-2017
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AN I NTERVIEW WITH HIREDGRAD INTERVIEW
One of the fastest growing companies tapping into a fresh talent pool via established student societies in Europe, HiredGrad is determined to help students leverage their networks to find the right jobs. Andrea Bonaceto, CEO of HiredGrad, shares with us about his journey of building the company and thoughts on job applications.
HiredGrad is the first platform looking at graduate recruiting with the eyes of student societies. We are creating a tool for student societies to provide real value to their members by connecting them with opportunities from the best companies at scale.
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COULD YOU SHARE WITH US ABOUT YOUR BACKGROUND AND HOW THE IDEA FOR HIREDGRAD CAME TO BE? I graduated from Imperial College with MSc. Finance and have worked at Deloitte, KPMG and Satago, a FinTech London-based startup. I started HiredGrad with my friend and co-student Krishna Venkata straight after graduation. Since Krishna and I were both recent graduates, we directly experienced the lack of exposure of students and graduates towards interesting opportunities within fast growing companies. Hence we decided to solve this problem, by connecting such companies with the bureaucratic free and engaged network of student societies and their members. WHAT IS THE MOST REWARDING THING ABOUT RUNNING A START-UP? The most rewarding aspect is working on something you are really passionate about and be focused on solving a real problem by starting from scratch. HOW DOES HIREDGRAD WORK, AND WHAT ARE SOME OF THE KEY EVENTS THAT HIREDGRAD HOSTS? HiredGrad is the first platform looking at graduate recruiting with the eyes of student societies. We are creating a tool for student societies to provide real value to their members by connecting them with opportunities from the best companies at scale. Societies can invite their members to join HiredGrad, increasing their chances of being hired and invite the companies in HiredGrad’s network to any on-campus event, for meaningful in-person interaction. We provide a bureaucratic free and cost effective solution for THE PINNACLE | 2016-2017
high-growth companies to connect with those who have a real link with students and grads – the student societies. We guarantee companies a constant on campus presence and the possibility to access an online network of high skilled and proactive talent pool. We have hosted multiple events in conjunction with some of the main student societies, from universities such as University of Oxford, London School of Economics (LSE), University College London (UCL), London Business School (LBS), University of Cambridge etc. If you are interested in finding out more about our events, check out www.hiredgrad.com. GIVEN THE CURRENT JOB MARKET ENVIRONMENT, WHAT DO YOU PREDICT WILL CHANGE ABOUT JOB APPLICATIONS AND CAREER BUILDING?
WHAT IS ONE ESSENTIAL TIP ABOUT NETWORKING YOU WOULD RECOMMEND TO OUR READERS? Prepare your elevator pitch before any networking event, in order to be able to present yourself in 1 or 2 minutes giving information on your background and relevant achievements. Networking is a great way to find your dream job and that’s the reason why at HiredGrad we constantly organise recruiting networking events in partnership with student societies.
There is an increasing trend of students and recent graduates being interested in working for startups. HOW CAN OUR READERS LEARN That’s mostly due to the growth in MORE ABOUT HIREDGRAD? the startups ecosystem in London. The best way to learn more about WHAT DO YOU THINK IS A MAJOR HiredGrad is to check out our platMISCONCEPTION A M O N G form live at hiredgrad.com U NDER GR ADUAT E S T UDE N TS WHEN IT COMES TO MAKING JOB APPLICATIONS? The major misconception is the lack of diversification in job applications. I would advise to apply for companies of any size, and try to get experience in both big and small companies. There are a lot opportunities available in fast-growing startups, accelerators and boutiques that are worth exploring.
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VENTURE CAPITAL SOCIETY - C REATION OF A NEW MOVEMENT INTERVIEW
MOST OF THE TIME, IDEAS MAKE UP ONE PERCENT OF THE WHOLE PICTURE, BUT THE 99% IS ABOUT TURNING THE IDEA INTO ACTION, WHICH IS THE HARDER PART.
Former president of UCLU Investment Society, Nigel Ng, and Hoong Chun Wong are stirring up a movement in venture capital for students. We sit down with both of them to speak about how Venture Capital Movement came to be.
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LET’S START ON A MORE PERSONAL NOTE. HOW DID EACH OF YOU BECOME INTERESTED IN VENTURE CAPITAL IN THE FIRST PLACE? WHAT SORT OF EXPERIENCES HAVE LED YOU TO TAKE THIS PATH? HC: The interest of starting a venture capital society at UCL was ignited during my experience back in Singapore. Before I came to London to study, I had been quite involved in the startup scene in Singapore, where I came into contact with startups raising high-valuation grants and venture funds. I was very excited about the fund-raising process, getting to know the investment process, and how a startup grew from an idea to a real startup selling, and eventually exiting from their business. When I came to UCL, I realized there is the Investment Society, which deals with the buy/ sell-side of the area, and Business Society, which teaches students how to do business. Investment Society is more focused on investment management and financial services, where Business Society is more focused on the prestartup mentoring. So there is this mismatch. There could have been an existing startup which could have had ongoing trading, yet is looking out for real funding, real mentoring and actual opportunities from existing investors. I then proposed to have a venture capital society in UCL, and after the approval that was when things started coming together. We received support from the British Private Equity & Venture Capital Association and and the UCL School of Management as well. N: I think my interest stemmed from having completed an internship in private equity before. Venture capital and private equity are quite similar, except venture capitalist is more of an elitist investor, but they both invest in private companies. I thought it was THE PINNACLE | 2016-2017
quite interesting that you could help small private companies grow bigger with your expertise, knowledge and connections, and that is something that has grown quite big in the whole venture capital scene in the US and London. It was something I wanted to explore and see if I was interested in. Then after I met Shirlyn, our Co-founder and Head of Operations, and Hoong Chun, both from Singapore, I learnt that they had already started the idea of VCM, so I thought why not join them and try it out. WHAT WAS THE AIM OF SETTING UP VENTURE CAPITAL MOVEMENT AND GOALS YOU WANTED TO ACHIEVE? N: We started out simply wanting to advocate what venture capital is to undergraduate students. Most students don’t really know what venture capital is, while they do know about investment banking or consultancy. Since we obtained funding from the British Private Equity & Venture Capital Association Association, this advocating was something they hoped we could do as well. HC: Like Nigel has mentioned, after we had conceptualized Venture Capital Movement, there was a big gap between expectations and reality. We believed the frameworks of Investment Society and Business Society doesn’t really apply to us, because venture capital firms do not see the gain of involvement on campus. We had to re-pivot our objective once more, from focusing on understanding venture capital fundraising and current processes, to identifying startups looking for collaborations with us. Additionally, we had experienced entrepreneurs coming in to share on what is the next ‘big thing’ aspiring entrepreneurs
can work on.
INTERVIEW WHAT TIPS DO YOU HAVE FOR STUDENTS TO COME UP WITH BUSINESS IDEAS ? HC: I would say not to find a business idea, but to find a problem to solve instead. This is the core of a business; it’s about matching a solution to a problem that have yet to be solved. If you are an aspiring entrepreneur, problems can arise from simple situations in your surroundings. I do not think business ideas need to be new or completely unique. It has to have a Unique Selling Point, but it can spin off from existing ideas. Problems are everywhere. As long as the problem is big enough for people to pay for you to solve it, you can make a business or even sustain until exiting. Find an area you are interested in, and find a mentor specializing in that area, and most importantly, you must be willing to take action and actualize the concept. You just have to start and learn along the way. You can never know enough to
start a business. N: You should always find a problem you are passionate about, instead of doing something for the sake of it. If you are working away at 2 or 3 am and you are not passionate enough, you would start wondering if it was worth it. It is wrong to start a business with an exit opportunity in mind. If you are thinking of exiting in two years selling for 10 million, there is something wrong with your angle. But then some think otherwise. It doesn’t have to cost a lot of money to start a business. You could pick up skills like coding, along the way. DO YOU BELIEVE NETWORKING IS IMPORTANT IN THIS INSTANCE? N: Networking is important, but you don’t network to get benefits out of a certain person. You should be openminded, wanting to learn about what other people can offer and what
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you can offer to others. Some of my best contacts are through random networking sessions, where you happen to just click with someone. Attending conferences or small startup events that bring startup founders together is useful, where you can actually exchange business ideas. Some people are reluctant to share their ideas with others, which is a problematic mindset. If you are not willing to share your ideas, why would you even start a business? HC: That is a very good point. Most of the time, ideas make up one percent of the whole picture, but the 99% is about turning the idea into action, which is the harder part. By not sharing, you are not opening yourself up to opportunities. Others may be able to share their resources or contacts with you. Always bring something useful with you to a networking session, because you never know - opportunity may just be around the corner.
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INTERVIEW
A C HAT W IT H TE R R I LOKSA - D I R E CTO R AT DAR T M OUT H PA R TN E R S INTERVIEW
Don’t be disheartened by tough interviews or failed applications. The most important thing to most companies is to find the people who are the right ‘fit’ for their business, and you likewise should be looking for the right place to start your career. THE PINNACLE | 2016-2017
INTERVIEW COULD YOU SHARE WITH US A LITTLE ABOUT YOUR CURRENT ROLE AT DARTMOUTH PARTNERS? I run the Graduate Recruitment Team at Dartmouth Partners; we partner with leading organisations across the direct investment and advisory industries to help them hire some of the best and brightest graduates for their businesses. This means everything from designing marketing strategy and implementation, to interviewing and assessment. We are completely outsourced by our clients to manage their graduate and intern recruitment campaigns and our opportunities range from the elite boutique M&A advisories, mid-market investment banks, Hedge Funds and Asset Managers. GIVEN THE CURRENT MACROECONOMIC ENVI- RONMENT IN THE UK, HOW WOULD YOU PREDICT THE GRADUATE RECRUITMENT ENVIRONMENT TO BE AFFECTED? Although the current macroeconomic environment feels uncertain in the medium term, many of our clients continue to do well. Unlike in the financial crisis of 2008 - when many firms froze headcount, especially at the graduate level - there seems now to be a recognition that graduates are a hugely valuable asset to an organisation, and that the short-term financial saving of not hiring at that level are massively outweighed by the benefits of having an eager, motivated class of juniors join the business. That means that many of our clients are choosing to continue to recruit - more selectively, perhaps - at the graduate level in order to make the most of the upturn, when it comes. FROM YOUR PERSPECTIVE, WHAT HAS CHANGED THE MOST IN TERMS OF HIRING PRACTICES IN THE
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FINANCIAL INDUSTRY DURING THE PAST FIVE YEARS? As hiring processes have been formalised and the numbers of applications have gone up, we’ve seen the benchmarks steadily raised for candidates. This applies both to the quantitative skills required to progress in the application process, and to the amount of knowledge and preparation expected of candidates - while an internship isn’t mandatory to make your way in the financial industry, you do need to show that you’ve done your homework and know what you’re letting yourself in for. As demand for jobs within the financial industry has increased due to the glamorisation of investment banking among other things, benchmarking has become even more stringent for some of the top firms. Where recruitment processes used to rely on academic excellence for benchmarking purposes, we are seeing an increased trend in the necessity of extra-curricular activities and work experience to help individuals stand out. FROM YOUR EXPERIENCE, WHAT IS ONE QUESTION THAT IS THE MOST CHALLENGING TO THE MAJORITY OF CANDIDATES? Strangely enough, one of the most simple questions that candidates stumble on is “Why do you want to pursue a career within Finance/Investment Banking/Asset Management etc?”. When preparing for interviews, few individuals actually think about why it is they’re keen to pursue a career within the industry and when they’re inevitably asked during the interview, they give a vague and unconvincing answer. Therefore, one key tip in any recruitment process and one that is important to differentiate yourself from other candidates is to really think about why you’re applying for that
position and why you’re motivated to pursue a career within the industry. IN SOME SITUATIONS, INTERVIEWERS WOULD POSE UNUSUAL QUESTIONS OR BRAINTEASERS. HOW SHOULD STUDENTS APPROACH THESE QUESTIONS AND USE THEM TO THEIR ADVANTAGE? Firstly, unusual questions and brainteasers should be approached quite differently, however the most important thing to remember for both is not to rush! Candidates often dive into their answer, saying the first thing that comes into their head, when really what’s required is a bit of time to consider the questions and work out what you think it might be getting at. For unusual questions, what you need remember is that the interviewer is looking for spark, initiative and something different to what they usually hear. For example, interviewers may often ask you to tell them something that’s not on your CV, tell them an interesting fact about yourself, ask you what your favourite book is etc. so for these questions the key is to tell them something unique, interesting, and most importantly, memorable. For brain teasers, talk your interviewer through your thought process, and help them to understand how THE PINNACLE | 2016-2017
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INTERVIEW
you’re thinking about the problem and what possible routes to solving it you’re considering. Don’t get flustered or give up - we’re really not looking to trip you up, and more often than not, we don’t know the answer ourselves, we just want to see how you react to being confronted by a question where the answer isn’t obvious or you’re put on the spot, and what we’re hoping to see is a calm, collected and logical response. WHAT IS ONE TIP YOU CONSIDER TO BE ESSENTIAL WHEN IT COMES TO MAKING APPLICATIONS OR GOING THROUGH INTERVIEW STAGES? Don’t be disheartened by tough interviews or failed applications. The most important thing to most companies is to find the people who are the right ‘fit’ for their business, and you likewise should be looking for the right place to start your career. Trust that the interview processes you go through are designed to make sure that you end up in the right place and, remember, practice makes perfect. Therefore, the more interview practice you have, the more comfortable and confident you will be with talking about yourself, your experience and your knowledge. WE WOULD LIKE TO LEARN MORE ABOUT DARTMOUTH PARTNERS. WHAT ARE SOME OF THE EVENTS D A R T M O U T H PA R T N E R S I S HOLDING WHERE STUDENTS
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CAN GET TO LEARN MORE ABOUT THE COMPANY AND SPEAK WITH REPRESENTATIVES? The majority of the events we run are very client-centric and, rather than focusing on promoting our own brand, we let our successful projects and prestigious client-base speak for itself. However, the graduate team are an extremely friendly bunch and are more than happy to talk to anybody with regards to career advice or potential opportunities, so what I suggest is for you to email gradteam@dartmouthpartners.com so that we can get in touch and introduce ourselves further.
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2 01 6 YE AR I N R E V I E W CALENDAR
A Roller Coaster Ride Here are some of the most momentous events in the financial industry and global economy in the year of 2016.
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Stock markets were off to a rough start in January 2016. Dampened global investor confidence and historic lows in central banks’ interest rates caused a stock market rout and the US stocks to tumble by around 10%. On the other side of the globe, Chinese markets experienced a steep sell-off and trading was halted on two occassions, or better known as the suspension of the circuit-breaker system.
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T he UCL Financial
Conference was held on 5th February 2016. Investors Oil prices has seen a turned to safe havens such as rocky road to recovery. gold and government bonds US oil finished the 2015 during the same month. financial year with a 30% decline.
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The Federal Reserve decided not to hike rates in March, as Yellen pointed to global economies that “continue to pose risks” and “the current shortfall of inflation from 2%”. In other news, Deutsche Boerse AG agreed to acquire London Stock Exchange Group Plc.
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Argentina sealed a $16.5bn sale of government debt, the largest emerging market debt offering ever on record.
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REVIEW
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07 05
In May, Russia places its first Eurobond since the Western sanctions were imposed two years ago.
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The UK voted to leave the European Union and the British pound fell to a 31-year low. Global markets reacted quickly, leaving US and European equity markets with heavy losses.
German bunds went into negative region in July since ECB left interest rate unchanged in response to the UK’s vote to leave the EU.
Renminbi’s inclusion as a global reserve currency commenced on 1st October, 2016. The British Pound plunged by 6% on 7th October 20cer16 amidst uncertainty over the impact of Brexit. Prime Minister Theresa May promised to invoke Article 50 by the end of March, 2017.
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The long-awaited global event, 2016 Summer Olympics was held in Rio de Janeiro, Brazil, commencing on 5th August 2016. In early August, the Hong Kong-based digital currency exchange Bitfinex was hacked, causing the price of bitcoin to drop significantly.
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In September, the world’s largest oil producers agreed to cut production for the first time in 8 years, signalling their commitment to easing the global oil glut, which sent
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Donald Trump is the President- elec t of the United States, and the scheduled inauguration is Janury 20, 2017. In the same month, the UCL Finance Conference was a big success, attracting students from multiple institutions and creating interesting discussions about hot debates in the financial services industry.
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In the world of social media, Facebook and Twitter both came under scrutiny over the fake news phenomenon. USD ended the year on a high note, arriving at a 14-year high on the WSJ Dollar Index. The Dow Jones Industrial Average ended 2016 at 19726. 60, up by 13%. THE PINNACLE | 2016-2017
GLOSSARY
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DID YOU KNOW?
B
ase currency is the currency used to evaluate the performance of funds or portfolios across several bsolute return funds international markets. ash calls are made when aim to generate postive a company makes a returns regardless of market request for more capital conditions and with low for investment from its volatility. shareholders.
A
C
D
ederal Open Market Co m m i t t e e i s t h e 12-member committee that controls US monetary policy.
ebt equity ratio is a company’s total debt over the amount of share capital it posesses.
F E
MIR (European Market Infrastructure Regulation) was enacted in July 2012 to regulate the EU derivatives market.
H
igh water mark is used to ross margin is the protect investors from difference between the paying for underperformance ncentive fees are paid selling price and the cost of by investment funds. by investors to fund producing it, excluding the managers, based on the general costs unrelated to managers’ performance and the particular product. a benchmark index.
G
I
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GLOSSARY
K
ey rate is the lending rate charged to commercial banks as set by the central bank.
J
L
unk bonds are high-yield bonds with high risk, that bears a BB credit rating or lower as rated by Standard
imit order is an instruction for the broker to execute a stock market transaction at the limit price or a more favorable one.
N
et Present Value is the difference between the present value of cash inflows and outflows.
M
oney market funds are a type of mutual fund investing in debt securities, with short maturities and little credit risk.
Q
O
ver-the-counter market securities are not listed on a stock or derivatives rospectus is the legal exchange. document that sets out details a business opportunity for a prospective investor. This must be approved by the Financial Conduct Authority prior to its publication.
P
ualified Foreign Institutional Investor Program was initiated in 2002 by the People’s Republic of edemption is the act of China, to open up access repaying a debt security to Shanghai and Shenzhen on or before its maturity date. stock exchanges for foreign investors.
R
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S
econdary shares are shares of a common stock sold to investors in an offering.
INTERVIEW
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LIFE AFTER UNIVERSITY INTERVIEW
Selin Yanyali, Ex-president of UCL Women in Finance Society, shares with us a glimpse into working in the Securities division at Goldman Sachs.
There is much more to any sector than you actually think, so try to figure out what you like and what you don’t like. Nobody would like to spend hours at an office that they hate or a job that doesn’t interest them.
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TO KICK THINGS OFF, WHICH ASPECT OF GOLDMAN SACHS ATTRACTED YOU THE MOST IN THE RST PLACE? When I first started university, most of the students who were studying economics and mathematics related subjects were talking about investment banks. I didn’t have a clue so decided to go to the UCL Banking Fair early in the year. e stand which was impossible to approach due to many students talking to representatives caught my attention: it was Goldman Sachs. I quickly got curious about what it had while the other didn’t. The employees that I met were very smart and full of energy that it made me want to learn more about the company. So I got the brochure and decided to apply to their event for UCL students at their London o ces. Generally banks organise events at UCL but GS was the first to open their doors to students that year, so it was the first time that I visited an investment bank. From the second that I entered the office, I started to have the feeling that I wanted to work there. After the presentation and the networking drinks, I was intrigued by the employees, their passion to learn more, their openmindedness and their business so I made up my mind to apply for an internship. COULD YOU SHARE WITH US THE ROLES AND RESPONSIBILITIES OF YOUR CURRENT ROLE? I’m working in the Securities decision as a sales analyst on the Equity Private Investor Product Group desk. We basically sell flow derivatives products or structured products to private investors such as private banks. It is a cross asset desk but considering the current situation of the markets, we’re mostly focusing THE PINNACLE | 2016-2017
on equities. There are lots of private investors in Switzerland and I’m covering the French-speaking clients there as well as the UK based clients, so my job requires being fluent in a few languages. It’s an entrepreneurial, constantly growing desk as we tailor products for our clients and also keep ourselves up to date with advancements in the financial industry to advise the new products that would match the needs of our investors. WHAT ARE SOME EXPERIENCES THAT HAVE LED YOU TO TAKE UP YOUR CURRENT ROLE? At the beginning, I wanted to try as many different industries and different roles as I can to decide better which one I like the most and suits me the most. So I started in Estée Lauder Cosmetics as a marketing and sales intern thinking that it was my dream job. After deciding that I wanted something different, more technical and analytical, I did a spring internship at Goldman Sachs which I loved. Following my spring week I received the summer internship offer for the next summer. therefore I decided to try some other internship to make sure that my decision was correct before joining GS again. As a result that summer I did a summer internship at Deutsche Bank in IBD division to see the other big part of an investment bank and also at Boston Consulting Group as I found consulting very interesting. After completing all these and getting offers from all for the following year, I chose Goldman Sachs because the fast paced environment of the markets and the client facing component of sales attracted me the most. More importantly, I thought that the culture at GS suited me the most, I really liked my colleagues, friendly and at the same time demanding and pushing you to your limits so
that you can be always better. During my summer internship at GS, I was lucky enough to find the desk that I really wanted to join at a very early stage so I succeed to show them my skills and how I was fit for the job. DO YOU HAVE ANY TIPS TO SHARE WITH OUR READERS WHEN IT COMES TO ACING JOB INTERVIEWS? Make sure you do a lot of research about the possible industries/positions that you’re interested in. Be curious and be willing to explore more! There is much more to any sector than you actually think, so try to figure out what you like and what you don’t like. Nobody would like to spend hours at an office that they hate or job that doesn’t interest them. There is no good or bad sector, as long as you do the best in what you’re doing. Also, if you want to work in a company/organisation, make sure you meet a couple of people before applying to learn about their job and more importantly, the culture at work and the jargon. This would have a huge impact on your cover letter. Lastly, for the interview, think of possible questions and have a few possible answers to them. In the end, it’s the answers of the candidate which determine the content and direction of the interview so lead the interviewer to the area where you feel the most comfortable.
INTERVIEW WHAT WAS THE MOST VALUABLE SKILL YOU HAVE GAINED FROM YOUR PAST EXPERIENCES, BE IT FROM WORK EXPERIENCE, YOUR DEGREE OR FROM THE SOCIETY ACTIVITIES YOU WERE ENGAGED IN? As I work in sales I deal with people, let it be clients or our traders all the time, managing relationships is one of the key skills. Being the president of Women in Finance Society at UCL had prepared me significantly as I was the bridge between our 15 sponsors and over 1000 of our members. Moreover, communication skills were very important within the committee too since there were many times when we didn’t agree but we managed the find a common solution. Lastly, there is always something unexpected happening at the last minute at work or you don’t have enough time to deal with it, therefore prioritising and the crisis management skills that I gained from my involvement with the society activities, through for example organising many events with our sponsors or other societies, helped me fulfil the requirements at work in various cases.
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INTERVIEW
A MINUTE WITH HSBC INTERVIEW
Parul Shukla - Analyst Recruiter for Global Markets, Global Research and HSBC Securities Services speaks with us about the graduate recruitment environment amongst banks and shares insight into making job applications.
More recently, companies tend to focus on whether or not the candidates’ values are aligned with an organisation which in my opinion are harder questions to prepare for or anticipate.
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INTERVIEW TO START OFF , COULD YOU SHARE WITH US A LITTLE ABOUT YOUR CURRENT ROLE AT HSBC? I lead on Graduate Recruiting for Global Markets (Sales & Trading), Global Research and HSS (HSBC Securities Services). Additionally I am responsible for managing the relationships with all London Universities for HSBC. GIVEN THE CURRENT MACROECONOMIC ENVIRONMENT IN THE UK, HOW WOULD YOU PREDICT THE GRADUATE RECRUITMENT ENVIRONMENT TO BE A ECTED? At HSBC we are committed to our graduate hiring and as such have not been impacted by the changing economic environment. FROM YOUR PERSPECTIVE, WHAT HAS CHANGED THE MOST IN TERMS OF RECRUITMENT IN THE FINANCIAL INDUSTRY DURING THE PAST FIVE YEARS, PARTICULARLY AMONGST BANKS? The graduate landscape has evolved considerably over the last five years. The rise of the Technology and Fintech industries as well as start-ups have provided alternative careers options for graduates. Additionally, job security and loyalty is not a priority as the quality of projects, rapid career progression and exible working which are given more importance for Gen Y & Z. The financial services industry has had to combat all these changes by adapting to the evolving graduate market.
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focus on whether or not the candidates’ values are aligned with an organisation, which in my opinion are harder questions to prepare for or anticipate. In order to do well with these types of questions, candidates should do their research on an organisation’s culture, values and history to be sure this is an organisation they would be passionate about joining. COULD YOU SHARE WITH OUR READERS TIPS ON HOW TO MAKE THE MOST OF INTERVIEWS AND FURTHER ASSESSMENT STAGES? Have a clear idea of what type of organisations and roles you would like to apply to. Make a short list and from that list identify your top picks so that you can prioritise the applications and interviews. Lastly, get your applications in early as most organisations recruit on a rolling basis. WE WOULD LIKE TO LEARN MORE ABOUT HSBC AND THE OPPORTUNITIES THAT IT OFFERS TO UNDERGRADUATE STUDENTS. WHAT ARE SOME OF THE UPCOMING EVENTS HSBC IS HOLDING WHERE UCL STUDENTS CAN GET TO LEARN MORE ABOUT THE COMPANY AND SPEAK WITH REPRESENTATIVES? We have 3 main programmes that we recruit for- Spring Insight Programme 2017 (for those graduating in 2019), Summer Internship Programme 2017 (for those graduating in 2018), Graduate Programme 2017 (for those graduating in 2017).
FROM YOUR EXPERIENCE, WHAT IS ONE QUESTION ASKED DURING INTERVIEWS THAT IS THE MOST CHALLENGING TO THE MAJORITY OF CANDIDATES? More recently, companies tend to THE PINNACLE | 2016-2017
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INTERVIEW
WORKING AT MAZ ARS - JAMES ROWLINSON INTERVIEW
The first thing is to put yourself out there as you will learn so much.
THE PINNACLE | 2016-2017
Ever wondered what it is like to work as an investment analyst in a global audit, accounting and consultancy firm? We speak with James Rowlinson at Mazars to understand what exactly the role is, and gain insights into the financial industry from his perspective.
INTERVIEW WOULD YOU MIND SHARING WITH US HOW YOUR EXPERIENCES OR EDUCATION HAVE LED YOU TO TAKE THIS PATH AT MAZARS? I studied at LSE and so I have a background in economics. I worked for a hedge fund in a middle office role but always wanted to be an investment analyst. I decided to study for the CFA which certainly added to my suitability for the role. HOW WOULD YOU DESCRIBE THE ESSENCE OF YOUR ROLE AND RESPONSIBILITIES AT MAZARS? My primary role is as an investment analyst. We invest clients’ money through collective investment funds. Obviously some funds are better than others and my role is to ensure the ones we use are positioned to perform well and invest as advertised. We also do some consulting work for charities whereby we review the performance of their investment managers. This is an area where we can add a lot of value, as trustees often have no formal financial training and so have little way of knowing whether they are getting value for money. WHICH ASPECT OF YOUR ROLE DO YOU FIND THE MOST REWARDING? Clearly when our portfolios perform well we know we are adding value for our clients and this is always pleasing. From time to time some of our funds will underperform but this does not necessarily make them poor investments going forwards. I take particular satisfaction when we retain funds that have been going through a rocky period and they subsequently outperform. AMIDST
THE
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UNCERTAINTY AFTER BREXIT, HOW DO YOU PREDICT THE INVESTMENT MANAGEMENT INDUSTRY IN THE UK AND EUROPE TO BE AFFECTED IN THE SHORT TO MEDIUM TERM? Since Brexit the UK investment management industry has seen a huge outflow of assets, higher than during the 2008 financial crisis. Although in the short term this is obviously unfortunate, the industry in the UK will adapt and I’m sure will continue in sound health. However until the details of how the UK leaves the EU are finalised, the long term shape of the industry in the UK is impossible to guess. Paris and Frankfurt have already made their bids to be the main European hub post-Brexit, as it seems very likely there will be some business that can no longer be conducted from a London outside of the EU such as the settling of Euro transactions. Again, the extent of how much business moves to the continent will depend on the post-Brexit deal.
The question is will oil recover to anywhere above $60 at all? Although the low oil prices have forced some players out of the market, the companies remaining in the US especially have become so efficient that they can operate long term with oil below $50. This calls into question the long term viability of OPEC since pretty Saudi Arabia is the only country able to deal long term with these low prices, and this is a massive strain for them given their social contract.
ON A SEPARATE BUT SIMILAR NOTE, HOW DO YOU PERCEIVE THE ROLE THAT CONSULTANCIES PLAY TO EVOLVE FOLLOWING THE BREXIT RESULT? Consultancies could very well see their work increased. As companies prepare for the new realities, which will probably result in regulatory changes across the board, executives will seek consultation in adapting their business models to maintain or increase their market shares in the new environment. WE HAVE SEEN OIL PRICES EXPERIENCE MAJOR FLUCTUATIONS SINCE THE END OF 2015. WILL OIL EXPERIENCE A ROCKY ROAD TO RECOVERY? THE PINNACLE | 2016-2017
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HOW WOULD YOU PREDICT THE TREND OF SMART BETA IN PORTFOLIO MANAGEMENT TO GROW IN THE NEAR FUTURE? Smart Beta is a very good strategy and we certainly keep an eye on it. It takes a set of factors other than capitalisation to reconstruct popular indices. I would like to see how these funds perform during a significant 2008-like downturn before I pass a verdict though. What works now may not necessarily work in the future. We need to see that these portfolios can adapt their quantitative strategy to adapt to changing liquidity conditions and changing factors driving market returns. IT IS NEVER EASY TO TAKE THE FIRST STEP IN CAREER-BUILDING. WHAT IS ONE PIECE OF ADVICE YOU WOULD SHARE WITH OUR READERS WHO ARE INTERESTED IN INVESTMENT MANAGEMENT? The first thing is to put yourself out there as you will learn so much. I had quite a few interviews before managed to land my first job but you learn a lot from each one, even if the interview itself can be quite intimidating. Also if possible get to know about all the different avenues for a career in finance. I remember at university it seemed like there were two or three potential careers but there are literally hundreds, and some of the less well known avenues can be some of the most rewarding.
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INTERVIEW
A CH AT W ITH
FACTSET
It is difficult to start a career. We speak with Sarah Yango, Vice President of Academic Programs at Factset to understand how to navigate the job market and listen to her advice on starting out as a fresh graduate.
Sometimes I think knowing what you don’t like to do is just as important as knowing what you do want to do, and oftentimes it’s easier to know when you definitively hate something. The important thing is that you are taking steps, even small ones, to get closer to where you want to end up ultimately.
THE PINNACLE | 2016-2017
INTERVIEW WE WOULD LOVE TO LEARN MORE ABOUT FAC TSET. COULD YOU EXPLAIN THE BUSINESS MODEL AND MAIN PRODUCTS OF FACTSET? FactSet delivers the world’s best insight and information to investment professionals through superior analytics, service, content, and technology. More than 65,000 users make smarter investment decisions with FactSet’s desktop analytics, mobile applications, and comprehensive data feeds. FactSet is also an honouree of Fortune’s 100 Best Companies to Work For list in the US and a Best Workplace Award recipient in the United Kingdom and France. FactSet is listed on the New York Stock Exchange and NASDAQ (NYSE:FDS | NASDAQ:FDS). COULD YOU SHARE WITH US YOUR ROLE AND RESPONSIBILITIES AT FACTSET, AND HOW YOU CAME TO TAKE UP YOUR CURRENT POSITION? In addition to traditional financial professionals, FactSet also partners with other institutions that have exposure to the markets. I work on FactSet’s Academic Program to support global colleges and universities to integrate FactSet in their curriculum to make coursework more practical and to allow their students hit the ground running if they work in Finance post-graduation. I am actually very new to FactSet; I started here just this past May. I chose to join FactSet because the culture is very entrepreneurial and management is very supportive of new ideas. I also really enjoy technology and even though I’m not a developer myself, I like the fact that I get to work within a technology company. WHAT IS THE ONE SKILL YOU HAVE ACQUIRED FROM YOUR DEGREE THAT YOU BELIEVE IS ESSENTIAL TO YOUR CURRENT ROLE?
I think the main skill I got from my degree was the ability to think critically and communicate effectively. I took a lot of small classes and seminars where you were expected to actively participate and I learned that I am much more confident when I have put in the time to prepare. In a Sales role, I think it is very important for you to be able to put yourself in your clients’ shoes and anticipate not only their needs, but also their reactions to change, and the best way to do that is to know your products and clients very well. However, I think having solid communication skills is an iterative process – you try new things and sometimes they work and you put that new piece into your arsenal, but sometimes they don’t and you try something else the next time. THERE IS A VAST AMOUNT OF OPPORTUNITIES IN THE FINANCIAL INDUSTRY TODAY, HOW WOULD YOU ADVICE STUDENTS TO DISCOVER WHAT IS THE BEST CAREER PATH FOR THEMSELVES? I think there is a lot of pressure on students to know what they want to do early on, sometimes before they have even had a chance to try doing the actual job they are applying for so a lot of times, their impression of the role is purely based on what people have told them or even what they have seen on TV. I don’t think there is anything necessarily wrong with that but I do meet a lot of people who are surprised about what the actual dayto-day of their job is like. Because of this, I think the best way to find one’s career path is to just try different things early in your career and to be open to new opportunities because you can’t really know whether you will like something until you try it. And even if you hate it, at least then you can rule it out as a future
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career. Sometimes I think knowing what you don’t like to do is just as important as knowing what you do want to do, and oftentimes it’s easier to know when you definitively hate something. The important thing is that you are taking steps, even small ones, to get closer to where you want to end up ultimately. WHAT IS THE MOST MEMORABLE PROJECT YOU HAVE WORKED ON SO FAR? This is a tough one because I have been lucky enough to be a part of lots of new, cutting-edge projects over my career. I think my favorite would have to be establishing the academic program at my previous firm. I was doing Recruitment at the time and professors kept approaching our table at on-campus career fairs and asking us why we didn’t offer a discount to schools who want to use our software in the classroom. I ended up putting together a business plan for academics and when it was approved, I got to manage the project globally. The experience of putting together a strategic business plan and working with a team to execute was invaluable for my career because I obviously enjoyed it and am still in the field.
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COULD YOU SHARE WITH US SOME TIPS ON HOW STUDENTS MAY USE INTERVIEWS TO THEIR ADVANTAGE? I think one thing to remember during recruitment season is that interviews cut both ways; it is just as much an opportunity for the student to understand the firm they are applying to as it is for the firm to see whether the candidate is a fit for the role. I think some candidates want their enthusiasm for the role to shine through to the interviewer and they hesitate to ask questions for fear of coming off critical. I worked in Recruitment at one point and as an interviewer, you can tell when the candidate has done their research about the firm, understands what the job entails and prepares thoughtful questions.
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AN IN TERV IE W WITH C R É D IT AG R ICOLE CIB INTERVIEW
The banking industry is complex, and business models today are evolving with technological advancements and preferences of consumers. Isabelle Girolami, Head of Global Markets at CrÉ dit Agricole CIB shares with us her views on recent trends in macroeconomic policymaking as well as implications of Brexit for the Eurozone. Study hard of course but also and more importantly open your mind - travel, read, meet lots of different people and experience different cultures.
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WE ARE HONORED THAT CRÉDIT AGRICOLE CIB IS A PARTNER OF UCLU INVESTMENT SOCIETY FOR THE ACADEMIC YEAR 2016-2017. COULD YOU SHARE WITH US A HIGH LEVEL OVERVIEW OF YOUR ROLE AND HOW YOU CAME TO TAKE UP THIS POSITION TODAY? We are delighted to be a partner to UCL Investment Society, being a sponsor means a lot to us. In my opinion it is key to be well connected to the talents of tomorrow and to be able to attract them to join our company and work for our business. I joined Crédit Agricole CIB at the end of September 2015 to take the lead on the Global Markets activities of the Bank. As Head of the Global Markets Division, I report to Jacques Prost, Deputy CEO and I am a member of Crédit Agricole CIB’s Executive Committee. Before joining the Bank, I was Head of Global Markets ASEAN at Standard Chartered based in Singapore. I have extensive experience from Europe and Asia and my career in banking began in 1995 at BNP Paribas where I was Chief Operating Officer for Global Fixed Income. I then moved to Bear Stearns in 2000 as Chief of Staff for Europe and COO for Fixed Income Europe and Asia. In 2008 I joined Standard Chartered as Head of Global Markets Europe and Co-Head Wholesale Banking Europe and in 2011 I was appointed Head of Global Markets SEAN. I graduated from Ecole des Hautes Etudes Commerciales in Paris with a major in international law and finance. How I came to take up my current position? All my previous roles taught me a lot in terms of technical knowledge but most importantly I acquired over the years resilience, THE PINNACLE | 2016-2017
work ethics, discipline, leadership skills, along with the importance of developing a vision and a common goal. MACROECONOMIC POLICY-MAKING IS CHANGING AS CENTRAL BANKS ATTEMPT TO USE UNCONVENTIONAL MONETARY POLICIES IN FACE OF SUBDUED GLOBAL ECONOMIC GROWTH. WHAT IS YOUR VIEW ON THE IMPLICATIONS OF THIS ON THE BANKING INDUSTRY AND WHAT YOU SEE AS AREAS OF CONCERN OR OPPORTUNITY FOR THE RATES, CREDIT AND CROSSASSETS DERIVATIVES PIPELINE? Central banks are faced with a macro environment where growth is ok but inflation remains subdued and is likely to remain low over the medium term. In this environment central banks would remain behind the curve and maintain accommodative policies. As conventional policies are reaching their limits, central banks are seeking alternative policies to make sure that monetary policy transmission remains functional and risk sentiment does not take a hit for the negative side. What does it mean for rates - core rates be it in Europe or US will remain low for longer supported by central bank policies and as Mario Draghi said “interest rates have to be low today to be high tomorrow.” Rates are likely to remain range bound which implies that investors need to be nimble in seeking trading opportunities. For peripheral bonds, despite volatility, they will remain driven by central banks and a bid for yield environment. For secondary market (or trading) challenges, low volatility and liquidity
will likely persist (i.e. in the context of two-way trading activity) for the foreseeable future; firstly, QE is reducing the amount of bonds available which exacerbates the dampening of secondary market activity due to risklimiting regulatory measures (i.e. diminished ‘warehousing’ capabilities, higher liquidity requirement); excessive cash levels in the markets have and will probably continue to result in excess demand over supply of bonds, particularly in the Eurosovereign market. This imbalance and resulting limited volatility is a challenge to generating profits. Negative rates, the flatness of the curve as well as low volatility and liquidity are challenging banks to look for alternatives and/or niches to generate profits. This search for opportunities has and will probably continue to evolve when central banks come up with new initiatives to support their respective economies. What does it mean for CreditSpreads have been driven close to post-financial crisis lows in the credit market and although company fundamentals remain solid, and we still remain in a favourable part of the credit cycle, valuations do look too tight. CSPP buying has artificially supressed volatility in the credit market but this should start to increase once the ECB moves away from QE to alternative policies, and
INTERVIEW increase once the ECB moves away from QE to alternative policies, and we expect spreads to widen as a result. Despite this funding costs will still remain favourable for corporates and access to the market good with the credit market in Europe having matured a lot since the financial and sovereign crises. AS A LEADING EUROPEAN RETAIL BANK AND THE FIRST EUROPEAN ASSET MANAGER, WHAT IS CRÉDIT AGRICOLE CIB’S VIEW ON THE TREND OF RESPONSIBLE INVESTING AND ITS POTENTIAL? Responsible investing means taking into account environmental, social and governance (ESG) factors in investment decisions. This is obviously something that the Crédit Agricole group has integrated in its business approach for a long-time, in line with the founding values of our cooperative banking group. This is especially true in our asset management division, where Amundi is a global leader in responsible investment. This is also true for the investment bank. First, we strive to evolve toward ESG exemplarity (e.g., we founded the Equator Principles, we recently announced that Crédit Agricole is stopping financing coalrelated projects). Also from a business standpoint, since we are convinced that global social and environmental challenges will require significant amounts of financing in the coming years, we have organised ourselves to capture this business. One example of our success in this space is our global leadership in the Green Bond and Sustainability Bond market where we have been elected “Best Bank” on a global basis, for the third year in a row. We keep on pushing to maintain this leadership. For instance, during the COP21 our
CEO committed the Bank to arranging at least $60bn of climate- related financing before the end of 2018. We are on track! WHAT ARE YOUR THOUGHTS ON THE ENVIRONMENT OF THE SEARCH FOR YIELD IN THE EUROZONE PERIPHERY RIGHT NOW, AND HOW WILL CRÉDIT AGRICOLE REPOSITION ITSELF IN THE MIDST OF BREXIT?
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LAST BUT NOT LEAST, IF YOU HAD THE OPPORTUNITY TO TURN BACK TIME, WHAT ADVICE WOULD YOU GIVE YOURSELF WHEN YOU WERE AN UNDERGRADUATE STUDENT? 1. Study hard of course but also and more importantly open your mind - travel, read, meet lots of different people and experience different cultures 2. Experiment - you are at an age where taking risks is easier so take risks and experiment 3. Do not be obsessed with a given path or your future career - if you are smart and hardworking, things will fall into place and you will succeed
The Eurozone peripheral spreads are supported by a slowly improving economic environment in the Eurozone, but above all by the ECB monetary policy. As the economic situation in the Eurozone, albeit far better than it was 4 years ago, remains subdued, and as the inflation should remain at low Above all, aim to be a better person levels during the next years, the ECB and a leader people will respect. should keep its exceptionally accommodative monetary policies for a prolonged period. Consequently, peripheral spreads should remain tight in the medium term, despite episodes of volatility due to banking system worries or political developments. To date, Brexit seems to have very limited impact on Crédit Agricole’s core business: the impact on the Eurozone assets is quite limited and forex volatility is essentially on the GBP. We will closely monitor the medium term consequences of Brexit, more in terms of opportunities to seize than in terms of concerns for the bank. Crédit Agricole CIB remains dedicated to its clients to help them navigate this period of uncertainty.
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ARTICLE
THE ORIGIN AND FUTURE OF ABE NOMICS ARTICLE BY GEORGE BIRT
THE PINNACLE | 2016-2017
Shinzu Abe’s popularity amongst the electorate is now unquestionable with the ruling coalition having its mandate renewed in early July, taking 70 of 121 seats. This is especially remarkable considering the discontent expressed regarding his potential constitutional alterations. Emphatically, this was a vote for Abenomics. It was an expression of a collective desire for an aggressive approach to policy setting which should supposedly propel Japan out of its seemingly perpetual deflationary pressure. The people have spoken and the financial world is poised in expectation with Abe in the spotlight.
In the twenty years preceding Abenomics, the story appears rather uninspiring with an apparent lack of conviction in policy setting. A common monetarist criticism was the lack of continuity between the relatively frivolous fiscal spending and appropriate monetary support. The result, unsurprisingly, has simply inflated national debt without reaching the desired ‘escape velocity’ from the deflationary cycle. All efforts, however, were not wholly futile, with internal expansions of money supply in the early part of this century leading to the beginning of an economic recovery, albeit in a time where other major economies were experiencing booming growth.
The progress made by Japan was quashed by the most recent financial crisis, where the economy was thrown back into its negative spiral of deflation. Japan, as a heavily export-led economic structure, faced a double edged sword of a crisis. A loss of large demand from US and European markets, as investment was almost nonexistent through a lack of extendable credit and confidence, threw GDP into freefall. The consequences of this demand crisis were exacerbated by the domestic currency being widely regarded as a ‘safe haven’ in times of uncertainty. The appreciation of the Yen only reduced Japan’s marginal propensity to export and the combination amplified the chronic price deflation, so undesirably entangled in Japan’s economic climate. Yet despite this, the Bank of Japan assumed an overtly passive stance, and when the delayed decision to engage was made, only short maturity bonds exclusively from banks, and not the broader public, were purchased half-heartedly. Frustration with the status quo was rife and sentiment felt the financial system declining with as little as a whimper. Japan needed rescuing but the world economy was in no condition to be able to do it.
As of December 2012, Mr Abe and his self-titled economic policy have been the trustees of Japan’s present and foreseeable future, promising to hold nothing back in the crusade against deflation, armed with the three-pronged approach of monetary, fiscal and structural reforms. In the focal point of the financial community, this promises to be the biggest experiment of the modern economic world. However, in Japanese history, this is not entirely unique. In the great depressionary era of the 1930s, under Korekiyo Takahashi, Japan was sensationally propelled into economic greatness on the world stage. Takahashi, through independent thought, led an era of rewriting the manual for economic policy setting. He removed Japan from the gold standard in December 1931, intentionally employed ‘Keynesian’ counter cyclical budget policies, and urged the Bank of Japan to monetise debts until the economy recovered which were later sold as bonds to banks. The most ingenious part came in the form of currency devaluation, causing Japanese exports to blitz through Asia and was definitive in the formation of the economic structure for the subsequent 80 years. Takahashi was assassinated in 1936 for planning to reduce military spending, but very few would ever dispute that, economically, one of the world’s most effective policy cocktail had been crafted.
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Uncanny similarities can be drawn between Abe and Takahashi, beginning with monetary policy – the area intended to do most of the short term heavy lifting for the recovery. The suppression of real interest rates, even to the extent of negative interest rates, is an aggressive form of the typical remedy for the current aggregate demand crisis. This together with a bottomless backing of QE to boot, characterizes the metamorphosis of the Bank of Japan. Government spending has been increased and intensified to help support monetary policy and efficacy, and promises of flexibility bode well for the future. However, history offers no transferable inspiration for the structural reforms, the third prong of Abenomics. Japan has to deal with an ageing population, lower participation rate in the workforce among women, a low birthrate, and the impact from Fukushima to name but a few. Centralist childcare support policies are in place to encourage participation from women, but cultural changes are never without complexity and the outcomes always uncertain. THE PINNACLE | 2016-2017
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FROM BLACK G OLD TO THE 21ST CENTURY ARTICLE BY ANDREJ BACHOLDIN
The oil price began its momentous, and largely unforeseen, collapse in June 2014. After nearly five months of stability, by November the price had fallen 40%. With the exception of a few short-lasting rallies and periods of false stability, the decline continued until January 2016, when Brent Crude reached $26.55, its lowest level in 10 years. Few were prepared. The Russian ruble lost more than 50% of its value; Nigeria’s central bank abandoned the naira’s peg to the USD. But, while still unbeknownst to the outside world, Saudi Arabia was also nearing disaster. Last spring, the IMF predicted Saudi Arabia’s reserves could last the country for at least five years of low oil prices. To the handful of insiders
in Riyadh, the situation could starkly be any different. Saudi’s burn rate of $30 billion a month meant that, at that rate, the country would be bankrupt within just two years. Yet the story of Saudi Arabia’s survival, and indeed future, began long before the events that grabbed the world’s attention. And much of the story revolves around one man. Prince Mohammad bin Salman is Saudi Arabia’s Minister of Defence, chairman of the Council of Economic and Development Affairs, deputy prime ministers and second in line of succession. Western diplomats call him Mr. Everything. He is also 31 years old.
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The late King Abdullah and Prince Mohammad bin Salman had a delicate history. Once, the King banned his nephew from setting foot into the Ministry of Defence, apparently for his disruptive and powerhungry tendencies. But they also shared a crucial common interest, to rid Saudi Arabia of its dependence on oil. For 80 years, oil was for Saudi Arabia what democracy is for the UK. Plentiful oil revenues provided the basis for Saudi’s social structure: absolute rule by the Al Saud family, in exchange for generous public spending, all legitimised by the Wahhabi religious establishment. Two years before his death in 2015, King Abdullah tasked Prince Mohammad bin Salman to prepare a plan on reducing the economy’s dependence on oil and, with it, change the country’s entire social construct. When Prince Mohammad bin Salman’s father, King Salman, assumed power in 2015, he gave his son unprecedented control over the state oil monopoly, Ministry of Defence, the national investment fund, as well as economic and foreign policy. In practice, Prince Mohammad bin Salman is today the power behind the throne. So when Saudi Arabia began heading for bankruptcy, Prince Mohammad bin Salman swiftly reinstated strict spending limits, tapped debt markets and cut the budget by 25%. Disaster, for now, was averted. However, Saudi Arabia’s transformation goes far beyond surviving until the next oil price spike.
THE PINNACLE | 2016-2017
Saudi oil policy, under the prince’s guidance, has broken with decades of historical doctrine as the leader of OPEC. In April, an OPEC-Russia production freeze was cancelled after the deal was already agreed; Saudi Arabia unveiled the National Transformation Program intervened because Iran did not want to freeze its production. In fact, according to him, whether oil prices rise or fall is not his top concern. “$30 or $70, they are all the same to us,” he said in an interview with Bloomberg Businessweek. If they rise, that implies more cash for non-oil investments. If they fall, Saudi Arabia, as the world’s lowest-cost producer, can regain market share. In June 2016, Saudi Arabia unveiled the National Transformation Program, a plan to reshape the country’s economy. Its goals, such as tripling non-oil revenue and creating 450,000 private-sector jobs by 2020, are ambitious. But so are the measures, which include the introduction of a value-added tax, cuts in public utility subsidies, and levies on luxury goods and sugary drinks. That is not to say the days of generous spending are over; there are, as yet, no plans for income taxes and, to cushion the impact of a slowing economy, poorer households are directly given cash handouts. The government is also exploring a possible IPO of Saudi Aramco, the national oil company. Valued at up to $3 trillion, Saudi Aramco would be larger than Apple, Google, Microsoft and Berkshire Hathaway combined.
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2016-2017 HIGHLIGHTS
The academic year of 2016-2017 has been one filled with wonderful memories and successful events. Here are some of the best moments we have captured for you.
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UCL Finance Conference 2016
The 2016 UCL Finance Conference was a resounding success, attracting both undergraduate and postgraduate students from numerous prestigious universities from the UK and abroad.
The day was filled with thought provoking discussions regarding digital transformations in the financial industry, issues surrounding the financial and economic ramifications of Brexit as well as regulatory practices. THE PINNACLE | 2016-2017
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UCL - LSE TECHNOLOGY PANEL DISCUSSION
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DISCOVER CRÉDIT AGRICOLE CIB - GLOBAL MARKETS
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SPONSORS AND PARTNERS (2016/2017)
DATA PARTNERS (2016/2017)
OTHER PARTNERS (2016/2017)
THE PINNACLE | 2016-2017