On April 25-29, CKGSB New York hosted 30 visiting students from Costa Rica’s INCAE Business School for an insightful week-long “Specialization in Finance” program. Students learned about the opportunities and challenges associated with global business ventures at a time of shifting economic conditions. The program included lectures, panel discussions and visits to three New York companies – Morgan Stanley, Bloomberg and the New York branch of Industrial and Commercial Bank of China, China’s largest bank.
The program highlights CKGSB’s ongoing relationship with the 62-year-old Latin American university whose alumni network includes more than 13,000 political and business executives. Previously, CKGSB hosted a “Doing Business with a Changing China” program for another group of visiting INCAE students at its Beijing campus.
From left to right: INCAE Academic Director Professor Arnoldo Camacho,
INCAE student Felipe Rojas and CKGSB Professor of Finance Henry Cao
“The US is the world’s largest economy, China the second largest and Latin American countries are resource-rich,” said Henry Cao, the New York CKGSB-INCAE program’s Academic Director. “It’s interesting for participants to come to New York to discuss the growth of US and China and what will be the best economic model for Latin American countries, given the new age of slow development.”
CKGSB’s and INCAE’s respective strengths and knowledge bases are “very complimentary,” said Arnoldo Camacho, an INCAE professor who gave lectures during the “Specialization in Finance” program on IPO and firm evaluation, investment selection and portfolio management and credit ratings.
“The Chinese economy is one of the largest in the world,” Professor Camacho said. “And we have strong ties with that economy. This (program) advances the possibility to better understand the linkages that we have and transfer that knowledge to our students,” he said.
With China’s economic health attracting worldwide interest, the program included a lecture on “Leveraging China’s Stock Market” by Professor Cao. The agenda also included talks on “US Economic and Monetary Policy” by CKGSB’s Professor Li Wei and “Behavioral Finance” by Princeton University’s Professor Harrison Hong.
“We (INCAE) are a global school, even though our focus is Latin America,“ Professor Camacho said in an interview. “We are integrated with the world. We benefit a lot from this type of alliance with other relevant business schools in ways in which we not only share experiences, but in how we have the opportunity to increase our access to markets. So it’s a way to globalize and nationalize our operations.”
Partnerships such as this are important to CKGSB, which, like many higher-learning institutions, is trying to broaden its global reach. In addition to INCAE, CKGSB also has partnered with US schools such as Michigan’s Ross School of Business, Harvard, Yale, and Cornell.
The “Specialization in Finance” program proved especially beneficial for one participant – Denise Soto, 34, a chief financial officer with a Nicaraguan financial firm exploring a possible initial public offering on Nicaragua’s stock exchange. After taking part in one of the program’s company visits – a trip to Morgan Stanley – she was able to set up a meeting with Morgan Stanley concerning her firm’s IPO ambitions. “They want to know [more about] the company,” Ms. Soto said.
Professor Henry Cao, Chair of the Finance Department at CKGSB
Professor Cao’s lecture illuminated a dimension of last summer’s Chinese stock-market swoon – that most of the retail investors who put money into shares during the main Shanghai Composite index’s historic plunge, weren’t using their own cash, but used their money as collateral to borrow more money than they had to invest – a practice known as leveraged investing.
“A huge amount of money had been put into Chinese stock markets over the past year or so by regular Chinese people, something the government had encouraged,” Professor Cao said. “But the influx of borrowed cash inflated prices to unsustainable levels. When prices began to dip, these investors were forced to sell shares to pay back the borrowed money and cover losses. That vicious circle of selling created panic and pushed down prices.”
Finally, Professor Cao moderated a panel discussion that included Cen Ming, Director and Senior Researcher at PWP Global Macro Fund, Jack Yang, an adjunct professor with Tsinghua University’s PBC School of Finance, and Liu Ling, Managing Director at New China Capital Management, investment manager for Cathay Funds.