SU team placed second in securities trading game

Posted by Melt van Schoor on 2020-11-09

This year’s International Finance FNB Securities Trading Game saw twenty-four postgraduate teams from Stellenbosch University, the University of Cape Town, and the University of Western Cape go head-to-head on a three-month live trading simulation challenge (from March to May) utilising a demo trading platform. Teams invested a hypothetical USD 100 000 in real-time foreign exchange and global stock markets, with the goal of achieving the highest return. The SU winning team, consisting of Nathan Potgieter and Jethro Tzemis (pictured above along with senior lecturer Hylton Hollander on left, and Richard Levesque of FNB Securities, right) received an FNB Securities stock broking account at zero cost plus R4 000 worth of FirstRand shares. They placed second overall, losing out in the final few days of the competition to a UCT-based team.

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.

The team described their experience and strategy as follows:

The FNB trading game was a fantastic experience and it offered a great contrast with the theoretical exposition that dominates academia. It was exhilarating to experience real world effects and their impacts upon markets, and we were absorbed into watching our trades grow on the platform. We did not initially experience any profitable trades, as the COVID-19 shock impacted markets within days after we invested most of our funds. Nevertheless, this allowed us to incorporate a new strategy. We understood that historically the market can almost always be counted on to overreact to initial shocks, and as such this offered a great opportunity for us to reallocate our capital into undervalued stocks. Our most profitable trade in this regard was Sasol, which had suffered massive drops in stock price attributable to the COVID-19 effects on oil demand, as well as various internal company specific issues. Initially, wary of a ‘dead cat bounce’ effect preceding a further decline, we were hesitant to overly commit. The fundamentals of Sasol appeared sound, however, as did their future prospects. Our strategy appeared to pay off, and we regained our initial capital, making significant additional returns. Overall, the FNB trading game was a thoroughly enjoyable experience.

(Thanks to Hylton Hollander for contributing this article.)

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