International Finance 2nd Annual FNB Securities Trading Game

The winning team. From left to right: Hylton Hollander (Lecturer), Georgina Geach, Richard Levesque (FNB Securities), Richard Leigh, Grant Rossiter (FNB Securities), Chandler de Kock, Elzaan Smit, Tamsin Grove, James Wales, Zanele Zaza (FNB Securities).

This year’s International Finance trading simulation saw our postgraduates awarded over R50 000 worth of First Rand shares and prizes. Seven teams went head-to-head in a trading experiment using a live FNB Securities trading simulator. Teams invested a hypothetical US$100 000 in real-time foreign exchange and global stock markets, with the goal of achieving the highest return over 3 months. The winning team members received an FNB Securities stock broking account at zero cost plus R4 000 worth of FirstRand shares. The objective of the exercise was for the students to test economic theory in the real world, understand international macro-developments, and encourage an investment mind-set. This year, both risk and honesty were rewarded.

FNB Securities

It’s been another fantastic opportunity for FNB Securities to engage with the remarkably talented International Finance postgraduate students from Stellenbosch University. The winning team showed great foresight in shorting the ZAR for one of their most profitable trades this year as political risk continues to be a predominant theme in global financial markets. The environment that Dr Hylton Hollander has created is something to commend, as he bridges the divide between academia and office. Again, a hearty well done to all the students involved and we look forward to next year’s competition, which could be the first Intervarsity challenge... – Richard Levesque (FNB Securities)

The Winning Team

Our team did not adopt a particular investment portfolio strategy. Instead, we turned to the political environment. At first, we bought U.S. stocks such as Apple and Exxon mobile due to Trump optimism in the markets. However, that strategy changed when British PM Teresa May triggered article 50 and Pres. Zuma fired, then Minister of Finance, Pravin Gordhan. Most of our returns came through shorting both GBP and ZAR. We made quite a bit of our profit from Alibaba and Orange telecoms as these stocks were perceived to be more volatile. Overall, our strategy was geared toward short-term volatility based largely on political news. Given the state of equity markets we did not expect much return, but were happy with the overall result. – James Wales

Honesty prize

FNB Securities awarded the “Master’s Team” a full prize for their honesty. A stock split glitch in the trading simulator gave the team big returns that would have seen them come in 1st place. It was reported by the team which lost them their top spot. Here’s the report from their team leader Angus MacDonald:

This year’s trading game was met by the Masters students with great optimism and a competitive hunger to take this opportunity and treat it in such a way that we could practically learn what it is like to partake in the market. The strategy we followed was less on speculation and more on a systematic approach that involved three steps.

Firstly, each group member was assigned a stock exchange to monitor and subjectively choose what stocks seemed promising. Secondly, these stocks were pooled into an excel spreadsheet that selected the most promising stocks based on certain criteria (such as the P/E ratio, profits etc.). Thereafter, we ran the stocks through an optimiser using R which then provided our group with what shares to buy, and their respective weighting in our portfolio. For the majority of us this was an exciting new way to approach investing, and one which we had not experienced before and we were all intrigued as to how such a tactic would play out.

This of course meant that little attention was paid to the currency market as the common consensus was that it involved too much uncertainty. Also, our vicious patriotism meant that we did not short the Rand. On the most part, this strategy served us well, and although the outcome did not meet the excitement, we learnt the valuable lesson that trading is a skill that takes time and patience if one wants to realise positive and significant returns. – Angus MacDonald

 
From left to right: Hylton Hollander (Lecturer), William Law, Angus MacDonald, Andrea Theron, Johann Pfitzinger, Grant Rossiter (FNB Securities), Ben Reyneck, Richard Levesque (FNB Securities), Tookho Putsoane, Zanele Zaza (FNB Securities).