If someone wants to be a good equity analyst he must go for a professional degree in CFA
Md Nafeez Al Tarik is the managing director and CEO of Asian Tigers Capital Partners Asset Management Limited. In an interview with The Business Standard, he talked about the role of an equity analyst in the present market. He also gave advice to youngsters who are interested to pursuing a career in this field.
TBS: An equity analyst can move up to the managerial posts once s/he gathers experience. You are a CEO now. Please tell us about your journey.
Nafeez Al Tarik (NAT): Normally an analyst starts working as an equity analyst or a research analyst. An analyst grows through his hard work and experience to become a senior analyst. When an analyst becomes a senior analyst his job is to manage a group of analysts, he builds relationships and gains access to different companies and he gets to understand the market better.
Eventually, a senior analyst grows to become the head of research, or more of an analyst manager.
Over time, an analyst manager moves forward towards business development, operations, selling or business generation, eventually working in a leadership role and managing a lot of analysts and departments, from where he lands in the position of a CEO.
The typical move is to start from the sale-side and then move to the buy-side. But in my case, I started with the buy-side, and later on, I moved to the sale-side, and I came back to the buy-side as a CEO.
TBS: What are the responsibilities of an equity analyst?
NAT: There are many responsibilities of an equity analyst, but his main target is to find out which shares are undervalued and whether it is a buy; and which shares are overvalued, and whether it is a sale.
An equity analyst needs to understand the financial statement, economics and the industry he works on. Initially, he works on a single industry, and over time when he becomes senior, he has to work on multiple industries.
TBS: What skills do you look for in equity analysts before hiring them?
NAT: You must have knowledge of different industries. However, you also need to be equally expert in terms of selling skills. Communication and presentation skills are also very important and you also need to be good at writing as well.
Other than these, understanding balance sheet, financial statement analysis, relationship skill is very important.
TBS: Why is the role of an equity analyst important?
NAT: The stock market is extremely volatile; making the right call can make you a lot of money, making the wrong call can make you lose a lot of money.
The right analyst can add huge value to the team. But becoming that analyst is very tough because making a mistake is very easy. You have to see how to make a lot of profit and minimise losses while making decisions.
TBS: Are there any drawback to being an analyst?
NAT: Before you join you might think that you will have a very successful career, but if the stock market is not in your favour for something like 10 years, then ultimately your career growth will get affected, because if your industry does not grow your career will not be prosperous.
Sometimes the stock market might grow even more than your expectation, in that case, your salary might increase or you might get a promotion, or you might get a bonus as well.
Again, there might be periods of downfall in the stock market, and in that case, it will affect your career.
TBS: Is there any training from where analysts can enhance their skills?
NAT: Definitely, there are trainings to enhance your skills as an analyst. As I have mentioned before, if someone wants to be a good equity analyst he must go for a professional degree in CFA. And beyond CFA, you need to acquire a lot of other soft skills and hard skills.
TBS: What is your advice to future analysts?
NAT: We should have a growth mindset. We should continuously look for opportunities to take up positions in good companies as finding a good company is very difficult.
For newcomers, only an honours degree won't help, they should go for CFA degrees, they should go for other professional degrees such as Chartered Accountancy or ACCA financial modeling training.