Investment Club
About Us
Brandeis University Investment Club (BUIC) strives to educate the community about the markets and investing principles through the collaborative management of a real portfolio. The club was founded in 1998 by students interested in learning more about the market and gaining real experience in investing. Consistent with the founding principles of the club, we believe that the learning value of investing real money is many times greater than that of virtual portfolio management. We currently manage around $13,000 of university endowment funds. All members of the community, regardless of experience levels, are encouraged to attend and participate in our weekly meetings. Many of our members are prospective professionals in the world of finance, providing an excellent venue to search for career advise and to network with like-minded peers. Many others are completely new to the stock market and investing, or seek to better manage their personal finances. The club also looks to work with individuals in the finance industry and academia who are interested in our goal of education.
Brandeis University Investment Club (BUIC) strives to educate the community about the markets and investing principles through the collaborative management of a real portfolio. The club was founded in 1998 by students interested in learning more about the market and gaining real experience in investing. Consistent with the founding principles of the club, we believe that the learning value of investing real money is many times greater than that of virtual portfolio management. We currently manage around $13,000 of university endowment funds. All members of the community, regardless of experience levels, are encouraged to attend and participate in our weekly meetings. Many of our members are prospective professionals in the world of finance, providing an excellent venue to search for career advise and to network with like-minded peers. Many others are completely new to the stock market and investing, or seek to better manage their personal finances. The club also looks to work with individuals in the finance industry and academia who are interested in our goal of education.
General Information
| Total Members | 185 |
| Events | Trip to the New York Federal Reserve coming up |
| Club Admins | Antony Stern/Jordan Michaels |
Events and Activities
Analysis of China’s Economy and Stock Market
By Maowei ZhuBrisk Economy, Gloomy Market
Chinese economy experienced a 9.5% GDP growth in 2004, even though the government has implemented various methods including tightened loans to overheated industries and the first interest rate hike in a decade to cool the economy down. Despite of the good news, the Chinese stock market is suffering one of the largest losses in history. Back in China, domestic stock market is dubbed as policy market, which means that the stock market is not driven by market forces such us earnings but by the policies proposed by the government.
Because of historic problems, Chinese stock market is quite different from its western counterparts. For instance, a public company can have two kinds of shares, one is called circulating share and the other is uncirculaing share. The former is the share we usually talk about while the latter cannot be traded in stock exchanges. This means prices are different between these two however shareholders of both kinds enjoy the same right. The government has been thinking of combining two kinds of shares into one or allowing uncirculating share to be traded in the secondary market. But once there was information about this proposal, the domestic market went through turmoil one after another.
Besides the historic problems like the above one, regulation is weak in Chinese stock market. Regulatory body hasn’t found an effective way to make public companies comply with laws and regulations. Companies’ financial statements are not believable and fraud is pervasive, marking investors not care about company’s profitability as investors do here in the United States. And this leads to the popularity of technical analysis in China. When I was studying finance at college, technical analysis was taught as the major content for an investment course, making me surprised to find people here don’t even care about it. To some extent, the popularity of technical analysis proves the inefficiency of Chinese market.
Corruption is another major concern in domestic Chinese stock market. Not only management teams in public companies are corrupt (a majority of public firms are state-owned), not also officials in the regulatory body and brokers/dealers are taking bribe or helping the company to make fraud. But the government is showing its resolution to build a clear and mature market. Dozens of corrupt officials and top managers have been prosecuted and put into jail. And the government is planning to save the market from its downturn for another time by using another favorable policy. Because of the anticipation for such a policy, the stock market witnessed the highest single day jump in two years on Wednesday.
Banking System in Scandal
Another scandal surfaced recently as an embezzlement case at a Bank of China branch involves $121 million. The case, involving a roadway company’s funds and social security funds, in the latest in a series of scandals at Bank of China, and could set back its plans for an overseas listing. However Bank of China is not alone, several similar cases were covered last year at Industrial and Commercial of Bank, the largest bank in China. The scandals truly confirm our doubt about the ability of Chinese banks to meet the strict regulation in US market. And an official from China Construction Bank (another state-owned bank planning of listing) expressed that they are reconsidering whether to choose list in US or only in Hong Kong because of the strict regulation by SEC.
Milestone in Domestic Listing
Chinese government lifted IPO freeze since last August as Huadian Power started it first trading day on Thursday. The fund raising of Hong Kong-listed electricity producer marks the beginning of a new pricing rule which is a western-style pricing mechanism based on investor demand. Under the old system, regulators decided final pricing and companies floated shares at about 20 times historical earnings, regardless of prospects or income quality. For company that is listed in both domestic and Hong Kong market, its domestic share often enjoys a premium of 30% over its Hong Kong counterpart because of two-thirds of China’s market capitalization are uncirculating shares. （Domestic market comprises of Shanghai Exchange and Shenzhen Exchange.）
2008-06-29 18:42:01
BRIC Countries Outlook
By Xiaofan ZhangBrazil
Appreciation of Real May Threaten Brazilian Exports
According to the Financial Times, weakness of the U.S. dollar, record export earnings, high domestic interest rates, and international bond issues resulted in huge inflow of U.S. dollars into Brazil, causing the Real to appreciate sharply. As Professor Osler taught us in the International Macroeconomics course, in reality, high interest rate currencies tend to appreciate, which is the opposite of what the interest parity theory suggests. Therefore, many people are now borrowing U.S. dollars to invest in Real, hoping to earn the double bonus – interest rate differential and appreciation of Real.
Although Real’s appreciation is likely to hurt Brazil’s export, we should not be too concerned about CVRD (RIO) the Brazilian stock in our portfolio. The Brazilian iron ore giant will obtain the 90% price increase it has been seeking from buyers. This means the company has very strong bargaining power and will be able to maintain its profit margin. Given the fact that China’s economy has not slowed down in the latest quarter (see below), RIO will continue to benefit from increasing demand from Japan and China’s steel makers.
China
China’s GDP Grew Faster than Expected in 4th Quarter, 2004
A recent release by the National Bureau of Statistics showed that China's economy accelerated to 9.5% growth year-on-year during the fourth quarter of 2004, exceeding forecasts (8.6% by Reuters survey) and raising concerns about another interest rate hike to avoid overheating. China’s government officials said they will strengthen and improve macro-economic controls and keep controls on credit and land.
This release indicated that there is still a risk of overheating in China’s economy. We should not forget the April and May of 2004, when PBOC, China’s central bank took measures to cool down the economy, our portfolio fell sharply. Therefore, we should remain concerned about China’s economic condition. If the GDP grows at the same rate in the next quarter, we should be very cautious and considering selling our Chinese holding, Sinopec (SNP).
“China’s Google” to Go Public in the U.S. Market
Baidu.com, China’s largest web search engine provider, is about to go public in the U.S. market. The company controls nearly half of China’s web search market share and is partly owned by Google. I think this is a good investment opportunity because: First, Baidu shares are likely to go up after its IPO, if we predict its performance based on the performance of other Chinese internet IPO’s in 2004 (SNDA, LONG, and JOBS). Second, as “China’s Google”, Baidu shares will benefit from investors’ recent enthusiasm about Google shares. After all, they are in the same business and Baidu is partly owned by Google.
India
S&P Upgraded India’s Debt Rating
On February 2, Standard & Poor’s raised India’s long-term foreign-currency debt rating by one notch to 'BB+'. S&P considered India’s economic prospects to be stable and good, with GDP growing at 6.5%-7.0% in the medium term. S&P cited the following positive signs in India’s economy: An improved banking system, a dynamic service sector, and an industrial sector benefiting from deregulation, trade liberalization, and infrastructure improvements. However, S&P remained concerned about India’s weak fiscal situation, indicated by the ratio of general government debt to GDP hovering above 80%.
Analysts believed this event was a “vote of confidence” on the fundamentals of India’s economy. Foreign direct investment and portfolio investment will continue to flow into India. This upgrade will boost investors’ confidence in India’s economy and will have positive influence on our Indian holdings, WIPRO (WIT) and TATA (TTM).
Russia
Russia Recorded Robust Growth in 2004
Russia’s economy grew by a surprisingly robust 7.1% in 2004, according to a release by Rosstat, the state statistical service. Some economists suspected that the figure may have been massaged to make it closer to the 7.2% goal set by the government. But Russian economic officials insisted the economy grew for good reasons, including rising prices of oil, gas, and metals, accounting for half the growth.
Economists expect Russia’s economic growth to slow to about 6% in 2005, partly because of constraints on oil export capacity. They also expressed concerns about the government’s increasing control of the energy sector because state-owned enterprises tended to underperformer privately owned companies.
This release showed us that Russia’s economic growth is still highly dependent on its vast reserves of crude oil, natural gas, and metals. It also told us that we should keep an eye on President Putin’s further actions on Russia’s business community.
2008-06-29 18:41:10
ING Groep IPO
As reported by Reuters, on Tuesday June 10th ING Groep NV sold $1.75 billion of perpetual hybrid capital securities, according to International Financing Review. The size of the deal was increased from the originally planned $300 million, said IFR, a Thomson Reuters publication. Citigroup Global Markets, ING Financial Markets, Merrill Lynch and Morgan Stanley were the joint bookrunning managers for the sale.2008-06-10 18:39:40
This week's IPO
Grupo Aeroportuario del Pacifico operates 12 airports in the Pacific and central regions of Mexico, including facilities in Bajio, Guadalajara, Hermosillo, La Paz,Manzanillo, Puerto Vallarta, San Jose del Cabo, and Tijuana, and a number of midsized cities. Six of the company's airports rank among the top ten busiest airports in Mexico, based on commercial aviation passenger traffic. Its terminals see close 23 million passengers per year. The Guadalajara airport accounts for a majority of the
company's traffic. The company holds a concession to operate and maintain all 12 facilities until 2048.
2008-03-16 20:19:28
