J.P. Morgan’s rollout of an investment modeling software for the investment bank’s key global clients underscores the growing importance of Asia.
While the bank plans to release the software — which allows users to model the impact of different economic variables on corporate results — throughout the globe, J.P. Morgan first introduced it in Hong Kong in November 2011. Sunil Garg, the bank’s Hong Kong–based head of research in Asia, and his team of more than 200 analysts distributed 3,000 copies of Interactive Sector Models to J.P. Morgan’s top 150 institutional investor clients — fund managers who manage 80 percent of funds globally.
“We are putting the power of J.P. Morgan modeling into hands of clients, and we did a global launch from Hong Kong,” says Garg.
The modeling software covers 10 major sectors, including auto, financial, consumer, telecommunication, real estate, tech hardware, metal and mining, and it allows fund managers to model stock performance of more than 700 Asian-listed companies based on different performance scenarios. The database of 700 stocks includes more than three-quarters of the companies J.P. Morgan covers in the Asia-Pacific region.
“The whole purpose of this is to give you interactivity and sensitivity,” Garg says in describing the software, which was handed out free of charge in the form of a compact disk and can be regularly updated via Bloomberg terminals. “The what-if analysis, which is the most powerful part of analytics, is what this is trying to do.”
The software, which includes data going back to 2009 and estimates through 2013, allows a portfolio manager to chart the impact of a number of variables on corporate earnings, balance sheets and valuations, and compare the results for sectors as well as individual companies.
The bank will introduce the modeling software to other parts of the world later this year.
J.P. Morgan’s head of global quantitative research, Steven Malin, is based in Hong Kong, where he directs a team of 13 analysts.
“A lot of product innovation has come out of our Asian office,” Garg says, “One of the things that we always aspire for is whatever is best practice, and if it has relevance, then we use it globally. That means good ideas can come from anywhere, and Asia has had its fair share.”
