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Mon 21 Mar 2011 07:29 PM

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Education is the best asset to invest in

Education is the best asset to invest in
Trust in the financial markets has plummeted in the wake of the global financial crisis, the CFA poll shows

You would not trust your health to a doctor who is not
qualified, so why should you trust your wealth to someone without proper professional
training? Trust is paramount in any investment relationship but it has taken a
battering lately.

In a recent survey of investment professionals undertaken by
CFA (chartered financial analyst) Societies around the GCC and Middle East,
over half of respondents believe that trust in the investment industry has diminished
since the recent financial crisis. Perhaps not surprisingly, in response to
that erosion of trust, the demand for professional qualifications has risen from
both employers and their employees.

If this reflects an
attempt to regain trust by the investment community, then it is a welcome trend.

A search to earn greater trust is perhaps only one factor
that is driving the demand for more professional qualifications. Another
equally powerful dynamic is the intensification of global competition, for both
jobs and customers. If the Middle East region aspires to continue to grow and
develop, it must be ever ready to face that tougher competition. In such an
environment, those employers who promote higher standards and best practices
will more likely succeed and attract the best local and international talent. The
same is true of national economies.

The drive for self-improvement is evident in the increasing
number of ambitious executives who seek professional qualifications as a passport
to the best jobs and pay.

Becoming properly qualified is a start but it is no longer
enough. As the complexity of financial instruments, markets and products increases,
and the body of knowledge for finance expands, investment professionals need to
continue learning so that they remain competent. A commitment to lifelong
education is the best investment in a changing and competitive world.

To regain trust with the public, investment professionals
need to adhere to ethical codes of conduct as well. According to the CFA
Societies Survey, 91% of respondents believe there is also a need for a
corporate code of conduct. That is, companies should be governed by appropriate
codes of behaviour, too.

Ethics and education are the pillars for every investment professional.
They are also the critical ingredients for sustainable economic development. The
GCC and the wider region would do well to invest accordingly. Experience shows
that economic growth requires healthy capital markets; in turn, functioning
financial markets need a pool of properly trained investment professionals.

Conducted over the past few weeks, the CFA Middle East
Societies Market Sentiment Survey reveals the current thoughts of some of the
region’s most senior financial analysts and fund managers, amongst others. Despite
challenging circumstances and recent market fluctuations, business confidence
remains relatively high and encouragingly optimistic, particularly in the GCC,
with the outlook for Qatari and Saudi Arabian equities attracting the most
positive responses.

Other highlights from the survey show general support for
GCC monetary union (54%) and its benefits, although 20% remain undecided. Interestingly,
93% of UAE respondents believe that the three local stock exchanges should
merge to create one national exchange, believing this would lead to greater
trading volumes, improved liquidity and enhanced visibility for international
investors.

(Nitin Mehta is the managing
director of CFA Institute for Europe, Middle East and, Africa. The opinions
expressed are her own.)

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