Knowing our Strength

1. HKSI Career Talk SeriesAn Insider ViewofDeveloping Your Career in the Financial Industry16 Nov 2007

2. Knowing our Strength • Our strength as an international financial centre • Location in the region & proximity to PRC • Infrastructure • Talent pool • Finance services as the pillar industry of HK economy 6.2% GDP in 1985 => 12.8% GDP in 2005 • No. of practitioners grows steadily SFC licensees: 20,201 in 2003 => 32,208 in Sep 2007 • HK licensing regime – upholding the standards of practitioners

3. Grooming of Talent • HKSI is a professional and examining body, dedicated to grooming new talent and contributing towards building a professional work force within the local finance industry through the following initiatives: • HKSI Sponsorship Programme • Jobs2Click (online recruitment service) • Membership services (professional development of new entrants) • HKSI Career Talk Series (provide useful and practical guidance) • Senior industry practitioners or the Insiders regularly share their real-life experience & provide advice to those seeking a career in Financial services.

4. Asset Management - the Opportunities AheadMs Samantha Ho (MHKSI)Member of HKSI Membership CommitteeInvestment Director of INVESCO Hong Kong Ltd

5. Number of Licensees / Registrants

6. Provide quality control on investment team/process and introduce enhancements if appropriate Resolve cross-border issues and leverage best practice Risk management Ensure disciplined investment process is followed Coordinate research efforts, supervise investment team Provide regional overview and strategy directions Coordinate portfolio construction and implementation within the context of a specific mandate Monitor and ensure synchronization buy/sell decisions Macro-economic research/liquidity analysis Specific country and portfolio responsibilities Stock research and analysis  Monitoring List and Country Models Risk and performance attribution analysis / investment team IT Best execution within compliance/audit structures Responsibilities – Asian Investment Team • Head of Investments, • Asia Pacific Region 2. Chief Investment Officer 3. Fund Managers 4. Risk and Performance Analysts 5. Centralized Dealing

7. Top Down Country Allocation Process External Factors Regional Factors Growth Earnings EPS Trend Valuation Absolute Relative Yield Gap Economic Growth CPI, i rate M Supply Trade, C/A FX Market Outlook US Equities US Bonds Currency US$ € ¥ Interest Rates US Europe Japan Economic Growth US Europe Japan Technical Fund Flow Commodity Political Country Risk Govt Policy Technical Liquidity Market Accessibility Regional Ranking Bull Bear Profile Country Allocation (100% Equity) Cash Level Asset Allocation (% Equity % Cash)

8. Investment Process - Overview Country Allocation Model Portfolios Stock Selection

9. Valuation • P/E (prospective), PCF, PFCF • Premium or Discount to NAV • DDM, ROE • Relative to historic, sector, market • Management/ • Franchise Value Determination • Management and Ownership • Quality of Earnings • Balance Sheet • Product Catalysts Identification Buy/Sell • Earnings Growth • Growth in EPS • Growth in Market Share • Origin of Growth • (Organic, new project, asset injection) • Liquidity • Days to get in/out • Total turnover • Facilitates asset allocation Price Target Stock Selection Process – Research ExecutionFundamental Stock Analysis

10. Stock Selection Process STEP 3 – STOCK ANALYSIS • Transparent and Disciplined Investment Process Portfolio Peer Review First Cut Analysis Company Visit Detailed Analysis Prepare Report Identify Stock Portfolio Discard Key Considerations • Screening: • - PBV Historical • - EPS Changes • - Growth • - Dividend • Research • Internal • External • Monitor List • SDRN • Financial • ROE, ROI • Cash-flow • Balance Sheet • Valuation • DDM • PER, PCF, PBV • -Sector relative • -Country relative • Franchise Management • Growth • Management • Integrity • Capability • Product • Business Model • Value Chain Analysis • Industry Food Chain • Product Analysis • Macroeconomic Issues • Update: • Growth assumptions • - ROE Cycle • Financial Analysis • Management • DDM • Price Implied Growth • Identify Catalysts Stock Checklist Target Price • Critique • Business Model • Growth Assumptions • Discount Assumptions • Identify • Confirmation Bias • Accessibilty Bias • Representation Bias Key Output Identify Missed Assumptions Free Cash-flow Leverage ROE > WACC Sustainable Growth - At least 15% • Business Sustainability • Relative Position on Food Chain • Value creation • Growth Assumptions • Normalized ROE • Normalized Payout ratio • Takeover Value • - Private market • Management buyout • Catalysts • Management • Industry • Technology • Target Price For illustrative purposes only.

11. Risk Management Process Description • Set performance and risk objectives • Set risk budget for portfolios • Monitor portfolio holdings, tracking error, active stock, sector and country bets through BARRA and FactSet reports • Monitor portfolio active TE contributions, stock liquidity • Monitor portfolio performance vs benchmark and peer group • Review performance attribution analysis • Review portfolio realized TE vs target TE • Monitor portfolio characteristics • Ensure product integrity • Quarterly portfolio review 1. Risk Budgeting 2. Risk Monitoring 3. Performance and Risk Management & Review

12. Overview of Operations Flow OPERATIONS • Make investment decisions • Create orders Fund manager • Execute orders with brokers • Ensure best execution Central Dealing Desk • Confirm trades • Send settlement instructions to custodians Settlement • Cash management • Asset reconciliation • Fund valuation and pricing Fund Accounting • Monitoring conduct of the firm and employees • Monitoring investment guidelines • Providing advice and direction on compliance with and • interpretation of relevant regulations • - Developing compliance manual Compliance

13. Investment Banking - the entrance and keys to successMr John Williamson (MHKSI)Director of HKSI BoardChairman of HKSI Membership CommitteeChief Financial Officer of Search Investment Group

14. Career Options Compliance Officer Fund Managers Private Bankers • Some high-powered jobs, such as those in investment banking, demand long hours. • Other roles, such as Business Support, are becoming increasingly demanding. • There are jobs for specialists: • IT • Legal • HR • Finance • Operations Research Analysts Portfolio Manager Operations Staff Risk Managers Traders • In short, whatever your degree subject, if you want to work in the financial services industry and have the necessary skills and personal attributes, there is likely to be a job for you.

15. Investment Banking • Investment bankers often seen as the most glamorous people - key roles & high financial rewards. • Work very long hours, enormous job pressure and must maintain the keenest awareness of risk management, stock market conditions, and economic trends. • Investment banking spans a wide remit including: • corporate finance (raising capital for companies by issuing shares or bonds); • mergers and acquisitions; • capital markets (trading in shares and bonds to make money).

16. Corporate Finance • What • Give advice to companies, institutions, and governments about how best to raise finance. • Help their clients to implement and achieve the desired results. Team Players Resourceful Ambitious Committed • Who • Many of those entering investment banking are young and highly ambitious; they have a work hard, play hard attitude. • Graduates looking to go into corporate finance, debt capital, or equity capital will need to be high academic achievers,capable of processing large amounts of information in a short space of time. Competition is high, but the rewards can be substantial. • Firms recruiting in this area will be looking for team players - you will need to be resourceful, ambitious, and committed. The hours can be long and socialising is often done within the group, so it is important that you like your colleagues!

17. Mergers and Acquisitions • What • advise clients as to which companies make good takeover prospects or, alternatively, advise potential targets on how to avoid being taken over. • Advice can range from simple strategic suggestions to detailed advice on how much to bid, how to finance the bid, and launching any counter-bid. • Who • As a graduate, you will be involved in the financial analysis, looking at the company’s profits, strengths, and other key factors, as well as undertaking preparation work such as checking documentation. • You will also increasingly be involved in face-to-face meetings with clients, including chief executives & entrepreneurs from a wide range of companies. • The hours in M&A can be horrific. As deals are closing, working weeks may exceed 90 – 100 hours. However, the financial rewards can be significant and international travel is commonplace.

18. Capital Markets • What • A trading department where dealers buy and sell shares, bonds, and other assets such as derivatives (futures and options). • The job is highly pressurised. Dealers buy and sell on behalf of clients and banks, to maximize money or to minimise financial risk. • Teams of researchers will feed information to the dealer for making informed decisions about whether to buy or sell. • A successful dealer needs a great deal of insight, good personal judgement and an element of luck! • In volatile markets, trading becomes frantic and large sums of money can be made or lost in minutes. • Who • Graduates seeking to go into the trading environment will need to have self-confidence, determination, be able to think on their feet and make informed decisions quickly.

19. What You Must Know Before the Interviews with Banks • How Banks Are Organised and Structured • The Top Ranked Banks • What Qualities Banks are Looking for In the Interview Process • What Qualifications You Need and How You Acquire Them • Fundamental Valuation Techniques • How To Get Invited to Interviews With Banks • Why Choosing The First Employer Is Crucial For Your Future Career

20. The Future of the Financial Industry • Increasing globalisation and use of information technology • Structural changes in the financial sector • More electronic transactions and outsourcing of functions • New and different forms of capital • Investment in technology, media, and telecommunications • Pensions gap pressure on investors • Emerging markets • Reputation and brand value • Access to finance Globalisation Outsourcing New forms Branding

21. In the Coming 10 or 20 Years • The sector will continue to attract able people who will, with the right combination of talent & hard work, find enormous satisfaction in the intellectual stimulation, teamwork, & financial rewards that the industry provides. • New jobs in the financial sector may emerge, requiring more specialist skill in niche markets and a greater focus on added value and creativity. • New and different forms of capital will dominate the investment scene, with greater mobilisation of individual wealth including private equity and more widely accessible start-up capital. • Global financial service institutions will require the right expertise to respond to these challenges, seeing the need to understand and respect the differences in the way markets operate, while applying universal principles to each. • Forward-thinking financial institutions will generate market advantage and superior returns by taking a longer-term view on company performance, allocating capital towards activities which are more inherently sustainable, & providing innovative solutions to the issues of environmental degradation, social inequity, and climate change.

22. My Advice is … • Think about your aspiration carefully…talk to others in the industry. • Consider what kind of skills or talent you have …or want to develop. • Learn about the history and developments of industry. • Explore the sector(s) that interest you most. • Decide how you are going to prepare yourself to succeed in this exciting but demanding industry.