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CFA Institute's India Investment Management Conference

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CFA Institute organized the "India Investment Management Conference 2011" at Mumbai on January 7, 2011. Renowned experts from the finance world like Abby Joseph Cohen, CFA and Professor Aswath Damodaran were part of the conference.

 

CFA Institute’s India Investment Management Conference 2011
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CFA conference organizers

Sougata Basu attended the conference in Mumbai and shares some highlights of the event.


“Investment business is a business whose currency is trust” – This was the key message echoed by senior finance professionals and market regulators during the India Investment Management Conference 2011. The CFA Institute along with the Indian Association of Investment Professionals and National Institute of Securities Market organized the "India Investment Management Conference 2011" in Mumbai on January 7, 2011. The conference focused on the topic "What's Next after the Recovery"? It made Prof. G. Sethu, OSD In-charge, National Institute of Securities Markets, wonder whether the global markets had really recovered. There remains a lot of concern regarding the fragile economies of the developed world, although  the emerging markets have recovered and are growing.

 

Ms. Abby Joseph Cohen, CFA (who is a Senior Investment Strategist and President, Global Markets Institute, Goldman Sachs) gave her insights on the global economic outlook. This session was moderated by Mr. Uday Kotak, Executive Vice Chairman and Managing Director, Kotak Mahindra Bank. Abby had a positive outlook on the US economic growth in 2011 and expected 3.4% growth of US GDP this year. She expected India’s economy to grow at 8.7%. She highlighted the demographic factors that are contributing to India's GDP growth. According to the data on Indian labour force, it's clear that India can gain huge demographic dividends provided adequate infrastructure (for education, healthcare, transport etc.) is developed on time.

 

One of the most interesting parts of this conference was Prof. Aswath Damodaran’s session on how to avoid some of the mistakes during valuation. He teaches finance at New York University and is the author of several books on equity valuation (Damodaran on Valuation, Investment Valuation, The Dark Side of Valuation). He suggested that it’s better not to forecast macroeconomic variables like interest rate or commodity price in the valuation model. Instead a range of scenarios can be prepared using simulation software like Crystal Ball. Many companies try to buy growth using mergers and acquisitions and investment bankers tend to overvalue such deals. So Prof. Damodaran mentioned that such growth can destroy value as easily as it can create value. He highlighted the mistake of using acquirer’s cost of capital (instead of the target’s cost of capital) while valuing a company during an M&A.

 

There were some interesting panels on Performance Measurement & Reporting, Fixed Income, Private Equity, Venture Capital & Real Estate, IFRS Update and Power Panel on India Investment Outlook. Ms. Fannie Fang, CFA, CIPM, Director, Global Investment Performance Standards, CFA Institute stressed on the importance of adopting the Global Investment Performance Standards (GIPS) for full disclosure of investment performance results. Mr. K. N. Vaidyanathan, Executive Director, Securities and Exchange Board of India said that some Indian asset management companies are more concerned about managing market share than managing the share market. This has led to “excessive dependence on the window-dressing“ of the Net Asset Value (NAV), improper benchmarking and collusion with fund rating organizations.

 

Most speakers believed that the Indian market had not only recovered but also was surging ahead at  a rapid pace. Mr. Madhusudan Kela, Chief Investment Strategist, Reliance Capital Ltd mentioned that there may be short-term hiccups in the Indian equity markets but in the long-term there will be numerous opportunities. Dr. Venkatraman Anantha-Nageswaran, Chief Investment Officer, Bank Julius Baer was cautious about the US economy's recovery and mentioned some structural problems that might cause another US recession in the next few years. He noted that the interest rate in US could not go any lower and  was also not feasible for them to increase leverage. US already has a huge debt which is about to touch the debt ceiling of $14.3 trillion.

 

Overall, the India Investment Management Conference 2011 was an informative  event that provided a great platform for exchange of ideas and business cards. We look forward to the next conference in 2012 and hope that it will become an annual event.



You may follow the conference official Twitter hashtag - #IND11. The graphics used in this article are properties of the CFA Institute.

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