Our second day of class began with Mikaal Abdulla from 8 Securities. He used the knowledge he gained from working at E*TRADE to start a mobile financial trading business. He started up his own business in Hong Kong, even though he said HK was a tough place to start a business. However, China is a great place to start a business because of the potential. The first of two main lessons from his talk was that financing will be hard to come by, especially external financing, so family, friend, and self-financing may be needed at early stages. The second was that the new competitors to financial institutions are unconventional sources like technology companies such as Alibaba.
Our second stop was Credit Suisse where we met with derivatives traders. We talked about the many parts of an investment bank and how investment banks work in Hong Kong. When we got to view the trading floor, we talked to more traders about arbitrage opportunities. There are about $1 billion to $1.5 billion in arbitrage opportunities, but everyone is trying to snatch them up. Moreover, trading is becoming more automated. However the logarithms that are built on the simplest models usually perform the best because they have fewer assumptions to unravel.
Last visit of the day was the CFA Institute where we learned about the firm that provides an essential credential to many finance professionals. While a large majority of CFA holders are in North America, a majority of individuals that are taking the test are from Asia. The CFA Institute believes that most people do it for the networking capabilities, learn applicable finance knowledge, and for the CFA title.