Goldman Sachs, Morgan Stanley need Equity Analyst in Japan! Career Path to be an Equity Analyst!

This is TJ, representative of Alpha! There's an article in the Nikkei newspaper! "Shortage of Analysts for Japanese Stocks: A Barrier to Investment Money with 70% Uncovered"

Shortage of Analysts for Japanese Stocks: A Barrier to Investment Money - Nikkei Economic Journal

Goldman Sachs, Morgan Stanley, and other foreign banks are also recruiting Japanese stock analysts, and we're receiving numerous consultations from those who want to challenge these positions. I'll explain the job of equity analysts. If you want to take on this challenge, please consult with Alpha right away!

What is an Equity Analyst?

An equity analyst is a professional who analyzes a company's financial situation, industry trends, and management strategies to provide information useful for investors' investment decisions. They are mainly divided into two types:
* Sell-side analysts: Work for securities companies, create company analyses and investment recommendation reports, and provide them to institutional and individual investors.
* Buy-side analysts: Work for asset management companies or institutional investors and conduct analysis for their own company's investment decisions.

The main duties of analysts include:
* Financial statement analysis and performance forecasting
* Industry trend research and analysis
* Corporate valuation and target price calculation
* Investment judgment presentation (buy/sell/neutral)
* Company visits and meetings with management
* Information provision to investors

In Japan, the Japan Securities Analysts Association Certified Analyst (CMA) is a representative qualification, with approximately 29,000 holders as of September 2024. Internationally, there is the CFA Institute Chartered Financial Analyst qualification, with over 190,000 holders globally.

Required Expertise

Successful equity analysts need the following specialized knowledge and skills:

1. Finance and accounting expertise

   • Financial statement analysis ability
   • Understanding and use of corporate valuation models (DCF, PER, PBR, EV/EBITDA, etc.)
   • Understanding of accounting standards (Japanese standards, IFRS, US-GAAP)

2. Industry and sector knowledge

   • Understanding of the structure and competitive environment of the assigned industry
   • Grasp of industry-specific indicators and success factors
   • Understanding of regulatory environment and technological changes

3. Understanding of macroeconomics

   • Analysis of how interest rates, exchange rates, and economic trends affect corporate performance
   • Understanding of global economic interrelationships

4. Modeling skills

   • Ability to build accurate financial models
   • Advanced analytical skills using Excel, etc.

5. Communication ability

   • Ability to convey complex financial and economic information in an easy-to-understand manner
   • Ability to create persuasive reports
   • Communication skills with management and investors

6. English language proficiency

   • Essential especially at foreign financial institutions
   • Ability to create English reports and presentations

Current Job Opportunities

According to the article, the market for securities analysts, including those at foreign financial institutions, has the following conditions:

Favorable Opportunities

• Major foreign financial institutions such as Goldman Sachs and Morgan Stanley are recruiting talent
• Individual investment has become more active with the introduction of the new NISA, increasing demand for high-quality investment information
• Analyst coverage is less than 30% of all Japanese companies, creating a gap between demand and supply

Background Market Environment

• In Japan, 70.5% of listed companies have no analyst forecasts
• Analyst coverage is particularly lacking for small and mid-cap stocks
• The top 50 companies by market capitalization are covered by an average of 10.7 firms, while many mid-sized companies have zero coverage
• Coverage of some companies has decreased due to rationalization by foreign securities companies

Expanding Opportunities

• New services bridging companies and investors have emerged (such as Nomura Securities' commissioned creation of analyst reports)
• Initiatives to fill information gaps, such as the TSE's publication of listed companies seeking contact with institutional investors
• Increasing need for information dissemination in English with the globalization of the Japanese market

Methods to Enhance Expertise

If you aim to become a foreign institution analyst, the following qualifications and education are effective:

1. Qualifications

   • CMA (Japan Securities Analysts Association Certified Analyst): A basic qualification to be recognized as a securities analyst in Japan
   • CFA (CFA Institute Chartered Financial Analyst): An internationally recognized financial analyst qualification, particularly highly valued at foreign firms
   • USCPA (US Certified Public Accountant): Demonstrates accounting and financial expertise and understanding of international accounting standards
   • CMA (US Certified Management Accountant): Qualification that demonstrates expertise in cost management and business analysis

2. Degree acquisition

   • MBA (Master of Business Administration): Particularly an MBA from a famous overseas business school is advantageous for employment at foreign financial institutions
   • Master's degree in accounting, finance, or economics: Provides academic background in specialized fields

3. Accumulation of practical experience

   • Accounting audit experience at an audit firm
   • Experience in finance or IR departments of business companies
   • Analyst experience at domestic securities companies

4. Building industry networks

   • Participation in Securities Analysts Association events and training
   • Active participation in industry seminars and research groups
   • Utilization of professional networks such as LinkedIn

5. Strengthening English skills

   • Acquisition of business and financial English
   • Improvement of English report writing and presentation skills
   • Overseas work experience or study abroad

Compensation and Career Path for Foreign Bank Analysts

Compensation Levels

The compensation for analysts at foreign securities companies is generally higher compared to domestic securities companies:
* Associate (1-3 years experience): Annual income of 10-15 million yen
* Vice President (VP, 4-7 years experience): Annual income of 15-25 million yen
* Director/Executive Director (8-12 years experience): Annual income of 25-40 million yen
* Managing Director (MD, 12+ years experience): Annual income of 40-100+ million yen

Compensation consists of base salary and bonuses, with bonuses varying greatly depending on individual performance and company results. Excellent sell-side analysts who are highly evaluated by institutional investors and hedge funds may earn high compensation as "star analysts."

Career Path to Buy-side

It is not uncommon for excellent sell-side analysts to be scouted by buy-side firms (asset management companies or hedge funds) as the next step in their careers:
* Analyst (buy-side): Annual income of 20-35 million yen
* Senior Analyst: Annual income of 30-50 million yen
* Portfolio Manager (PM): Annual income of 50-100+ million yen
* Senior PM/Fund Manager: Annual income of 100-several hundred million yen

Especially at hedge funds, there are performance-based success fees, so with excellent investment performance, annual income can reach several hundred million yen.

Benefits of Transitioning to Buy-side

1. Higher compensation potential: Performance-linked compensation systems are common, especially at hedge funds
2. Initiative in investment decisions: Ability to make investment decisions and be involved in actual asset management
3. Work-life balance: Tends to improve somewhat compared to sell-side
4. Long-term perspective analysis: Ability to focus on long-term corporate value rather than short-term quarterly forecasts

Keys to Success

1. Establishing expertise: Having deep knowledge and insight into specific sectors or industries
2. Building a track record: Accumulating a record of accurate investment judgments and forecasts
3. Network building: Establishing good relationships with institutional investors and corporate management
4. Unique perspective: Ability to provide value-added views different from market consensus
5. Visualizing achievements: Demonstrating your contribution through specific performance indicators

Summary

In the Japanese securities market, demand for high-quality analyst coverage is growing. There is a lack of analysis particularly for small and mid-cap stocks and growth companies, creating significant opportunities for analysts with expertise in these areas. To aim for a position at a foreign financial institution, obtaining internationally recognized qualifications or degrees such as CFA, USCPA, or MBA is effective.

In addition to financial analysis, industry knowledge, understanding of management strategies, effective communication skills, and English proficiency are also important differentiating factors. Currently, major foreign financial institutions such as Goldman Sachs and Morgan Stanley are recruiting talent, making this a good opportunity for career advancement.

By building an excellent track record, it is possible to advance from a sell-side analyst to a buy-side portfolio manager, potentially leading to a significant increase in compensation. With the globalization of the Japanese market and the expansion of individual investment, demand for high-quality investment information is expected to continue to increase.

Alpha Advisors - Financial Career Consultation Guide

Now is the Chance to Transition to a Foreign Bank Analyst

Are you aiming for an analyst position at a foreign financial institution? Prestigious financial institutions like Goldman Sachs and Morgan Stanley are actively recruiting in Japan as well. With the increase in individual investors and the penetration of the new NISA, demand for high-quality investment information is growing.

Start taking action now to take advantage of this market environment.

Alpha Advisors' Financial Career Consultation Services

Alpha Advisors provides the following services for those aiming to transition to the financial industry:

1. Career Consulting

   • Individual consultation by industry experts
   • Current skills analysis and market value assessment
   • Optimal career path design for you
   • Explanation of recruitment trends and desired talent profiles at foreign financial institutions

2. Qualification Acquisition Support

   • Acquisition strategies for international qualifications such as CFA, USCPA, CMA
   • Development of efficient learning plans
   • Provision of mock exams and preparation courses
   • Learning advice and experiences from successful candidates

3. MBA and Study Abroad Support

   • Application strategies for world top business schools
   • Guidance on statement of purpose and recommendation letters
   • Interview preparation and mock interviews
   • Study abroad funding plans and scholarship information

4. Job Search Support

   • Resume and career history document creation assistance
   • Interview preparation and case interview practice
   • Introduction to industry connections
   • Salary negotiation advice

Why Consult Now?

• Expansion of recruitment opportunities: Now is the chance with foreign financial institutions actively recruiting
• Importance of early preparation: Qualification acquisition or MBA study abroad requires 6 months to 2 years of preparation
• Intensifying competition: The talent market is becoming increasingly competitive daily
• Changing market environment: Need to understand financial industry trends and develop strategies early

Success Stories

• Mr. A (30 years old): Transitioned from a corporate accounting department to an analyst position at Goldman Sachs after 8 months of preparation
• Ms. B (28 years old): After obtaining USCPA and CFA Level 1, transferred to the research department of a foreign investment bank with an 80% increase in annual income
• Mr. C (32 years old): After completing an overseas MBA, moved from a foreign securities firm to a hedge fund, doubling annual income

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Don't just dream about career advancement in the financial industry; take a concrete step forward. Alpha Advisors will support your financial career building with all our effort.

Please consult with us now. We will help maximize your potential.

TJ@Alpha Advisors