7 Independent research analysis 2016 W 7 PDF

Preview

Summary

Download 7 Independent research analysis 2016 W 7 PDF

Description

Citigroup'sequitiesresearchdirectorcallsfor'thoughtleaders' TheAge,February4,2016 Equitiesanalystsneedtobecome"thoughtleaders"andexpertsintheirfieldtostay relevantinanindustrymovingtowardselectronictrading,index‐basedfundsandmore regulation,thenewdirectorofresearchatCitigroup,CraigWoolford,says. Whileinvestmentbanksandbrokersarecullingtheirequitiesresearchteamstocutcosts, MrWoolfordhasflaggedplanstosignificantlybuildthecapabilitiesandresourcesin Citigroup'sAustralianandNewZealandequitiesresearchteams,aftertakingthehelmfrom BruceRolphthisweek. "Ifwelooktothelast10yearsthere'sbeenareductionincostsandsomeveryexperienced analystshaveleftthemarket....butmostofthechangesintheindustryhavebeenanalysts leavingforeithercorporaterolesorbuy‐sideroles,"hesaid. "ThegoodnewsforCitiiswecutearlierthanourcompetitorsontheviewthebackdropwas notlookinggreat[and]we'renowinvestinggloballyinITandanalystslocallyandaroundthe world,"hesaid. "Iwantouranalyststoleadthedebate.Thatcanmeandifferentthingstodifferentanalysts –itcanbetheirindustryexpertise,itcanbetheaccuracyoftheirfinancialforecastsorthe successoftheirstockcalls. "Iwanttheanalyststohoneinonthosethingsthatreallymattermosttothemand,more importantly,theskillsthatarevaluedbytheclients." Independenceofresearch MrWoolfordisalsokeentoemphasisetheindependenceofCitigroup'sequitiesresearch,at atimewhenseveralfirmshavebeenaccusedofconflictofinterest,lackofobjectivityandof beingbeholdentocorporaterelationships. "TheChinesewallsareincrediblythickatCiti,"saidMrWoolford,whoreportstoCitigroup AustraliachiefexecutiveStephenRobertsandheadofAsianresearchBrentRobinson, ratherthanCitigroup'sinvestmentbankingormarketsteams. "Since2006thewallshavebeenstrengthenedandtherearenumerousexampleswherethe analystsareclearlyindependentintheirviews,regardlessofanycorporaterelationships," hesaid. Asacaseinpoint,MrWoolfordhashadasellrecommendationonWoolworthsformore than12months,eventhoughCitigroup'sinvestmentbankingarmisreportedtobeadvising Woolworthsonitsloss‐makingMastersbusiness.

MrWoolfordbelievesthereisaroleinthemarketforindependentequitiesresearchfirms thatearntheirincomefromsubscriptionsratherthancommissions. However,hesayssuccessfulanalystsneedtobeabletopulltogetheramyriadofdifferent sourcesofinformationtobuildaclearpictureofacompany'sprospects,andthis requirementfavoursorganisationswithextensiveresources. "Thatprocesshassomescalebenefits,whetheritbetheinformationsystemswehave accesstoortheglobalnatureofyourresearch,"hesaid."Successonthatscorelendsitself tobeingoneofthelargerbrokingfirmsthatdoeshavethatglobalreach. Lookingforexpertise "ThesuccessofsomeoftheseindependentfirmsonlyreinforcestheviewthatIhavethat clientsarelookingforexpertise." InEurope,newrulesarebeingintroducedthatwillrequirefundmanagerstounbundle researchpaymentsfromdealingcommissionstoavoidconflictsofinterest. TheEuropeanSecuritiesandMarketsAuthoritysaysfundmanagersshouldeitherpayfor researchoutoftheirownrevenueorsetupresearchpaymentaccountsforclientswithan agreedbudget. Investmentbanksandfundmanagershavebeenwarnedthatsimilarregulationswill inevitablybeintroducedinAustralia. "Ihaven'tformedastrongviewastowhetheritwillorwon't,"MrWoolfordsaid."I'm certainlyveryawareofitanditdoesinfluencemythinkingonhowwesetthedirectionfor thebusiness. "Withoutadoubtifthereisunbundlingthenresearchhastohaveaveryhighthresholdto proveitisaddingvalue.Butifwehaveateamofexpertswhoarewellrecognisedintheir fieldandoffersomethingdifferentiatedthenthereisnodoubtinmymindwecanstillbe rewardedfortheresearchthatwedo." MrWoolford,whojoinedCitifromCommsecin2005,iskeentocontinuetoleadCiti's consumersectorteamdespitehisnewresponsibilities. "I'mstilltheleadontheconsumersector.I'mverypassionateaboutbeingananalyst,"he said. ...