PROJECT REPORT

A study on growth of Investment & Wealth Management Businesses in UAE

In the Partial Fulfillment of the Requirement for the Degree of BACHELOR OF BUSINESS ADMINISTRATION

By

BADOOR ZAIDI REG. NO:0801025

Under the Guidance and Supervision of

Mr. Vishwanathan Bharathan

MANIPAL UNIVERSITY DEPARTMENT OF MANAGEMENT STUDIES ACADEMIC CITY, DUBAI, U.A.E

MAY 2011

Mr. Vishwanathan Bharathan Department Of Management Studies Manipal University Dubai Campus International Academic City Dubai, U.A.E.

Date: 01/05/2011

CERTIFICATE

This is to certify that the project work entitled, Study on Growth of Wealth and Innvestment Management in UAE Banking Sector , submitted to the MANIPAL UNIVERSITY DUBAI CAMPUS for the award of the degree of Bachelors of Business Administration, is a record of the original work done by BADOOR ZAIDI during the period of her study in the Department of Management Studies, Manipal University - Dubai Campus, UAE, under my supervision and guidance, and the project work has not previously formed the basis for the award of any degree, diploma, fellowship, associate ship or any other similar title, to any candidate of any University.

Signature of the Guide

DECLARATION

I hereby declare that matter embodied in this project work entitle

STUDY OF WEALTH AND

INVESTMENT BUSINESS IN UAE BANKING SECTOR is the result of the analysis of observations and interviews carried out by me under the guidance of Mr VISHWANATHAN BHARATHAN Department of Management Studies, Manipal University - Dubai Campus, UAE. This project work has not previously formed the basis for the award of any degree, diploma, fellowship, associate ship or any other similar title, to any candidate of any University.

Badoor Zaidi REG. NO:0801025

Department of Management Studies Manipal University - Dubai Campus International Academic City Dubai, UAE.

AKNOWLEDGEMENT

I would like to convey my sincere gratitude to Dr. B. Ramjee, director, Manipal University, Dubai Campus for providing an excellent learning environment. I would like to thank Mr. Vishwanathan Bharathan, Faculty of manipal University , Dubai Campus for giving me an opportunity to do and complete my project report as well as guiding me with my project report.

I m also greatful to my professors, family and friends for their corporation and guidance which enabled me to finish the project successfully.

Date: 1st may, 2011

Badoor Zaidi

Executive Summary

Practical part is an essential part of management studies as it helps one to visualize the management practices in the field and the theoretical aspects of which we have learnt in the classroom. This research study of investment & wealth management business analysis is based on financial market (wealth maximization options) , I have completed this research by collecting past quantitative data of financial market and about the financial instruments performance in the market. This research study has done on Several type of investment options which are very popular in the market (MF, SIP, TMD, INS). This research provides us knowledge of investment options and the a way to managing our wealth in a profitable way. It was very challenging as well as interesting for me to work on this kind of topic investment & wealth management business analysis. I have learnt practical & theoretical aspects which has implemented by the company in its business practices.

Table of Contents

Chapter 1. 2. 3. 4. 5. 6. 7.

Title Introduction Organization Profile Theoretical background/review of Literature Research Methodology Analysis and interpretation Findings Recommendation and Conclusion Reference Appendix

Page Number 9 13 22 53 60 79 91 93 95

List of Tables

Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8

Balance sheet of 2007 Cash flow of 2007 Balance sheet of 2008 Cash flow of 2008 Balance sheet of 2009 Cash flow of 2009 Balance sheet of 2010 Cash flow of 2010

List of Figures

Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Figure 7 Figure 8 Figure 9 Figure 10

CHAPTER 1 INTRODUCTION

Introduction

Investment management is the professional management of various securities (shares, bonds and other securities) and assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds or exchange-traded funds). The provision of 'investment management services' includes elements of financial statement analysis, asset selection, stock selection, plan implementation and ongoing monitoring of investments. Investment management is a large and important global industry in its own right responsible for caretaking of trillions of yuan, dollars, euro, pounds and yen. Coming under the remit of financial services many of the world's largest companies are at least in part investment managers and employ millions of staff and create billions in revenue. Wealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financial services. High Net worth Individuals (HNWIs), small business owners and families who desire the assistance of a credentialed financial advisory specialist call upon wealth managers to coordinate retail banking, estate planning, legal resources, tax professionals and investment management. Wealth managers can be an independent Certified Financial Planner, MBAs, and Chartered Strategic Wealth Professional. CFA Charter holders or any credentialed professional money manager who works to enhance the income, growth and tax favored treatment of long-term investors. Wealth management is often referred to as a high-level form of private banking for the especially affluent. One must already have accumulated a significant amount of wealth for wealth management strategies to be effective.

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NEED FOR STUDY

The need for investment management arises due to: The existence of a large number of complex financial products Financial market volatility Changes in regulatory requirements

Every individual practices investment management to some degree, including budgeting, saving, investing and spending. However, an investment manager is one who specializes in placing money in diverse instruments in order to accomplish predetermined goals. Investment managers are also widely known as fund managers. Investment managers may specialize in advisory or discretionary management. When an investment manager merely offers suggestions regarding where to invest money and when to sell securities, the practice is known as advisory investment management. When an investment manager can take action in managing portfolios without requiring client approval, it is called "discretionary" investment management.

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OBJECTIVE OF THE STUDY

To understand the growth of UAE banking sector on investment and wealth activities.

To study the progress of investment and wealth management activities of HSBC U.A.E for the period of 2007 to 2011

To compare the growth of investment and wealth management in HSBC activities with industry standards To forecast the future for investment and wealth management business in banks in U.A.E

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CHAPTER 2 ORGANIZATION PROFILE

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Organization Profile

Introduction We are the worlds local bank. Headquarters in London, HSBC is one of the largest banking & financial services organization in the world. HSBCs international network comprises over 9500 offices in 76 countries & territories in Europe, the Asia-Pacific region, the Americas, the Middle East & Africa. With listings on the London, Hongkong, New York, Paris & Bermuda stock exchange shares in HSBC holdings places are held by nearly 200,000 shareholders in some 100 countries & territories. The shares are traded on the New York stock exchange in the form of American Depository Receipts. Through an international network linked by advertisement techniques, including a rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial services likePersonal financial services Commercial Banking Corporate Banking Investment Banking Like all banks, HSBC is in business to make a profit. Yet returning the maximum investment to its shareholders is not the sole focus of this global financial institution. From its roots in rural Asia to its advancement to a global corporation, HSBC has maintained a core focus on basic principles. Achieving its aims and objectives by adhering to its values has allowed HSBC to maintain both profitability and high ethical standards.

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1. History
o

HSBC's origins and early history help to explain its values today. HSBC began in Hong Kong in 1865. Originally known as The Hongkong and Shanghai Banking Corporation Limited, the bank developed from the early needs of traders along the China coast. According to HSBC, the founding principles of the bank derived from local ownership and management; from the start, the bank was in business to help strengthen business communities and aid local investment. HSBC went on to develop a strong presence not only in Asia, but also in Europe and America. Today, HSBC is headquartered in London, England.

Basics
o

The aims of HSBC are revealed through its slogan and business focus. Branding itself as "The World's Local Bank," HSBC continues to concentrate on local investment as an engine of economic growth. In addition, the company's four key businesses are Global Banking and Markets, Private Banking, Commercial Banking, and Personal Finance Services; each of these business sectors allows HSBC to harness global economic trends to service both its current and emerging markets.

Function
o

Through its core business principles, HSBC functions to accomplish it objectives. HSBC.com lists these as outstanding customer service; effective and efficient operations; strong capital and liquidity; prudent lending policy; and strict expense discipline. HSBC also stresses that commitment by employees helps to create long-term customer relationships, a keystone of the bank's profitability model. HSBC.com states this is accomplished through attention to integrity, ethics and managerial oversight.

Significance
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HSBC's commitment to its values has allowed the company to accomplish many of its goals for expansion and profitability, as well as commitment to local investment and excellent customer service. HSBC is designed to be both global and local. Bankers Almanac ranked HSBC as the 14th largest bank in the world, in terms of assets, in 2009. In addition, HSBC is carrying its objectives forward into the Information Age: Global Finance Magazine rated HSBC as one of the world's best Internet banks for 2009.

Outlook
o

In the banking crisis that began in late 2007, financial institutions showed serious operational deficiencies, and banks have subsequently been called upon to reexamine their commitment to both their customers and to ethical standards. For example, HSBC in 2009 closed its U.S. "subprime" lending unit, which made controversial high interest loans to customers with weak credit profiles. The bank also made new commitments to support what it calls "sustainable finance," aiding investment in renewable energy markets and companies that address climate change.

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COMPANY HISTORY

The U.A.E based HSBC bank, its formal name HSBC Holdings plc, is the world's largest banking organization and ranks sixth in the world as the biggest company. Its name derives from the Hongkong and Shanghai Banking Corporation of Hong Kong. HSBC Holdings, established in 1990, is the parent company of the Hong Kong institution. 1. Origins

Sir Thomas Sutherland, founder of what is today HSBC Holdings plc.

The Hongkong and Shanghai Banking Corporation was founded by Scotsman Thomas Sutherland in 1865 shortly after the United Kingdom established a colony in Hong Kong. Sutherland wanted to facilitate the burgeoning trade between Europe and China by offering financing to new and established businesses. The new company established a branch in Shanghai, then another in Japan before offering public loans in 1874. 2. Expansion

An HSBC branch in Brunei in 1961.

Under manager Thomas Bart's leadership through 1902, the bank became the leading financial institution in Asia and served as the official Hong Kong government bank. New branches continued to open during the 1920s in Penang, Singapore, Bangkok, Manila and another in Shanghai. A new headquarters opened in 1935 in Hong Kong.

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3. On Hold

The HSBC headquarters in Shanghai was built in 1923.

The bank's expansion plans stalled when Japanese troops seized Hong Kong in 1941 and then used the bank's headquarters as a military office. Two of the company's high-ranking managers died in an internment camp. But the bank made up for lost time in the early postwar years by acquiring the British Bank of the Middle East and the India-based Mercantile Bank. 4. More acquisitions

The HSBC building in London.

During the next 30 years, the bank acquired the Hong Kong-based Hang Seng Bank and created Wardley Ltd. in 1972 as a merchant bank service. It attempted a hostile takeover the Royal Bank of Scotland in 1980, but failed when the British government interceded on the behalf of RBS. Yet it continued to acquire more properties, this time in the United States by purchasing a 51 percent holding in Marine Midland Bank. 5. HSBC Holdings

An HSBC storefront branch during a period of the bank's rapid growth.

By establishing public limited company (plc) the new HCBS was eligible to trade shares on the New York, London, Paris, Hong Kong and Bermuda stock exchanges. Throughout the 1990s it went on a spending spree, buying the Banco Bamerindus of Brazil for $1 billion in 1997; the Roberts SA de Inversiones in Argentina for $600 million two months later; and the New York-based Republic National Bank for $10.3 billion in 1999.
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6. A Stumble

HSBC Chairman Stephen Green acknowledged some of HSBC's financial missteps.

In its effort to acquire vulnerable financial companies, especially subprime lenders, HSBC acquired the U.S.-based Household Finance Corporation for $15.5 billion in 2002. It was an early foray into subprime lender acquisitions. But by 2009, HSBC lost $262 billion and shuttered its U.S. HSBC Finance division. HSBC Chairman Stephen Green later acknowledged the Household Finance deal was a disaster. 7. Standing Tall
o

While competitor Lloyds Banking Group, the parent company for the Royal Bank of Scotland and Halifax plc, recorded steep losses for the first quarter of 2009 due to bad loans, HSBC's previous sound acquisitions kept it in good shape as it reported first quarter 2009 profits. HSBC still wrote off about $25 billion in bad debts in 2008 but the losses were lower in the fourth quarter of that year than the first.

The HSBC Group is named after its founding member, The Hongkong and Shanghai Banking Corporation Limited, which was established in 1865 to finance the growing trade between Europe, India and China. The inspiration behind the founding of the bank was Thomas Sutherland, a Scot who was then working for the Peninsular and Oriental Steam Navigation Company. He realized that there was considerable demand for local banking facilities in Hong Kong and on the China coast and he helped to establish the bank, which opened in Hong Kong in March 1865 and in Shanghai a month later. Soon after its formation the bank opened agencies and branches around the world. Although that network reached as far as Europe and North America, the emphasis was on building up representation in China and the rest of the Asia-Pacific region. HSBC was a pioneer of modern banking practices in a number of countries. In
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Japan, where a branch was established in 1866, the bank acted as adviser to the government on banking and currency. In 1888, it was the first bank to be established in Thailand, where it printed the countrys first banknotes. From the outset trade finance was a strong feature of the local and international business of the bank, an expertise that has been recognized throughout its history. Bullion, exchange, merchant banking and note issuing also played an important part.

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SERVICES PROVIDED

Personal financial services-: HSBC provides more than 100 million customers worldwide with a full range of personal financial services, including current and savings accounts, mortgage loans, car financing, insurance, credit cards, loans, pensions and investments.

Commercial Banking:- HSBC provides financial services to small, medium-sized and middle-market enterprises. The group has more than 3 million of such customers, including sole proprietors, partnerships, clubs and associations, incorporated businesses and publicly quoted companies.

Investment Banking:- Global Banking and Markets is the investment banking arm of HSBC. It provides investment banking and financing solutions for corporate and institutional clients, including corporate banking, investment banking, trade services, payments and cash management, and leveraged acquisition finance. It provides services in credit and rates, foreign exchange, money markets and securities services, in addition to asset management services. Global Banking and Markets has offices in more than 60 countries and territories worldwide, and describes itself as "emerging markets-led and financing-focused. Global Banking and Markets is currently being led by former fixed-income trader Samir Assaf, who was promoted from global head of markets on 10 December 2010.

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CHAPTER 3 THEOROTICAL BACKGROUND/LITERATURE REVIEW

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Theoretical background Wealth Management & Branch Banking

Wealth Management services are delivered to customers through qualified Wealth Management across each of these branches. Wealth Management helps customers develop & execute a realistic & practical long term savings, investments & protection plans by investing in mutual funds, bonds & purchase of insurance products . Qualified, trained & accredited Wealth Management assist customers in charting a road map to achieve their individual financial goals & protect their family from unforeseen eventualities keeping in mind their available resources & based on each customers independent risk profile. Wealth Management services is currently offered to HSBC Premier & Power Vantage customers

COMMERCIAL BANKING HSBC is a leading provider of financial services to small, medium-sized and middle-market enterprises. The Group has over 43,000 such customers in India, including sole proprietors, clubs and associations, incorporated businesses and publicly quoted companies. Commercial Banking provides a full range of banking services to these customers including multi-currency business accounts, payment and cash management, trade services, factoring and a range of borrowing solutions. In India, Commercial Banking has a presence in 47 branches covering 26 key cities and for the convenience of our customers, a multi channel service including Internet and Phone banking. For SME customers, HSBC offers the complete range of transaction baking services as well as unsecured loans and loans for and against property. The services are supported by a large Sales and Relationship Management team in key locations across the country. India is the first country in the HSBC Group where Commercial Banking lends to Microfinance Institutions, thus providing indirect funding to hundreds of small business owned and run by members of underprivileged sections of society. A dedicated unit has been formed
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to focus on Microfinance and other Priority Sector institutions, with a view to further reach out to the marginalized and under banked. Factoring HSBC India offers a comprehensive range of Factoring and Supply Chain Finance Solutions, which include the following products: For Vendors/Suppliers/Purchase Channel of our corporate customers Payables Financing Purchase Order Financing For the Sales Channel of our corporate customers Factoring (With or Without Credit Protection) Export Factoring (With or Without Credit Protection) Portfolio Invoice Discounting (With partial credit protection) Distributor Finance Payables Financing: HSBC Indias Payable Financing product enables companies to finance their payables to vendors. This helps companies to provide immediate liquidity to vendors against their supplies at competitive rates and will enable the company to negotiate better pricing terms with vendors. It also enables the vendors to improve their cash flow by providing continuous liquidity against their receivables. Our payables financing products can be structured either against Bills of Exchange or Accepted Invoices.

Purchase Order Financing: is a facility to suppliers of our Corporate Banking Clients to finance their pre shipment working capital requirements. Pre shipment working capital lines are sanctioned to the suppliers against Purchase Orders issued to the suppler. Factoring: This is a service that covers the financing and collection of account receivables in domestic trade. Receivables are factored, by HSBC with added
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service of credit protection, collection and sales ledges administration. Thus the management of the company may concentrate on production and sales and need not concern itself with non-core activities like collection and sales ledger administration. Export Factoring: enables companies to finance their open account export sales at competitive rates either in Rupees or Foreign Currency. Through a network of overseas based correspondent factors, HSBC provides credit protection against buyer default and collection services. Portfolio Invoice Discounting: Essentially covers purchase of receivables with partial credit protection based on a First Loss Deficiency Guarantee. The portfolio should be well spread with acceptable levels of concentration and the debtors must have had a satisfactory track record with the company. A field audit will be conducted to determine portfolio quality based on which a First Loss Deficiency Guarantee percentage will be agreed. Collection remains the responsibility of the Corporate with repayments either on a pre-agreed schedule or based on actual collections. Distributor Finance: is currently offered to the distribution channel of Large Corporate Banking Clients and can be structured to suit the specific requirements of each corporate and its distribution channel. Through the Distribute Finance Program, HSBC finances companys dealers, which will assist the company in providing steady, assured credit to its distribution chain.

Payments and cash management Integrated domestic and regional cash management solutions are provided to corporate and institutional customers in India. The suite of offerings under the cash management umbrella includes comprehensive Receivables Management solutions, with an endeavor to completely integrate with the customers back-end operating systems and processes. HSBC is the leading foreign bank in India in providing capital market solutions, which include Bankers to Issue, Escrow account Services and Dividend payments solutions. Six Sigma measurement
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practices are followed for our operational capabilities. HSBC net, the HSBC Groups online real time web-enabled corporate banking platform, allows customers to execute financial transactions, obtain international financial market information and review details of their domestic and international accounts form anywhere in the world, 24 hours a day. Trade (international and domestic) service HSBC offers a wide range of international and domestic Trade products. In India, we offer one of the largest trade processing capabilities among peer banks, spread across 5 cities. Each of our Trade processing centers is ISO 9001-2000 certified. We work closely with Group Offices overseas and leverage our extensive global network to offer structured, tailor made solutions to a wide range of customers. Our clients in India include large India and multinational companies, Mid Market companies as well as customers in the Small and Medium Enterprises segment. CORPORATE AND INSTITUTIONAL BANKING Corporate Banking (CB) is an integral part of the Global Banking structure, which focuses on offering a full range of service to multinationals, large domestic corporate and institutional clients. Provides a wide range of banking and financial services provided to domestic and international operations of large local corporate and local operations of multinationals corporations. Services include access to commercial banking products, including working capital facilities such as domestic and international trade operations and funding, channel/distributor financing, and overdrafts, as well as domestic and international collections and payments, INR and Foreign currency term loans (external commercial borrowing in foreign currency), letters of guarantee etc. Institutional Banking drives the Groups relationship with banks, financial institutions, securities houses, insurance companies, and asset management companies and other non-banking companies, non-government and development organizations operating in India. Market leadership position based on strong relationships with major financial institutions. Investment Banking and Markets brings together the advisory and financing, equity
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Securities, equity linked transactions, asset management, treasury and capital markets, and private equity activities of the Groups to complete the Global Banking structure and provide a complete range of financial products to our clients. Clients are serviced by sector based client service teams that combine relationship managers, product specialists and industry specialists to develop customized financial solutions. These form the relationship team along with the Investment Banking structure and provide a complete range of financial products to our clients. Clients are serviced by sector based client service teams that combine relationship managers, product specialists and industry specialists to develop customized financial solutions. These form the relationship team along with the Investment Banking & Advisory division. Each team supports the clients local and global needs, ensuring a full understanding of the companys business and financial needs. Based on our clients requirement, HSBC assigns Global Relationship Management teams to provide structured solutions for all its needs. Our Global Relationship Management teams are tasked with understanding in depth the sectors in which our clients operate with the aim of adding value through detailed industry knowledge and structured financial solutions. Focus on overseas acquisition financing, corporate finance and advisory roles, overseas cash management opportunities, cross border funding, project & export finance through concerted marketing with all product providers. The Corporate Bank (CB) in India was top ranked (1st overall) in the 2005 Greenwich Survey with a Greenwich Quality Index (GQI) of 647. Currently CB manages approx. 470 CB relationships with total advances of approx. USD 1.08Bn as at end of Dec05 and total deposits of USD .98Bn. Sect oral account management- Improved industry knowledge andsector4 expertise. The CB portfolio is largely spread within the following sectors divided as under:

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Corporate

Institutional

Consumer Brands Industrials &Technology Energy and Utilities Telecommunications Automotive Healthcare Transport and Logistics Media

Banks Financial Institutions Securities Mutual Funds/Asset Management Companies Insurance Financial Sponsors Business Process Outsourcing (BPOs) Broker and Dealers

INVESTMENT BANKING HSBC FIXED DEPOSITS When it comes to assured returns, choosing the right type of savings scheme makes all the difference. HSBC Fixed Deposits let you make the most of value-added benefits as you create wealth at low risk. Features & Benefits The superior Fixed Deposit to invest in, for a secure future You can now open a Fixed Deposit with Rs. 10,000 only Enjoy high rate of returns on your HSBC Fixed Deposits Choose from a wide range of tenors as per your convenience

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Avail of our special rates for select tenors Certificate of Deposit Earn interest for funds invested from 15 days to one year, with HSBCs Certificate of Deposit (CDs). CDs can be availed by individuals (other than minors), corporations, banks, companies, trusts, funds, associations etc. Non-Resident Indians (NRIs) may also subscribe to CDs on a non-reparable basis only. Advantage Tenure A Certificate of Deposit is issued for a period not less than 15 days & not exceeding 1 year from the date of issue. Transfer Mechanism Certificate of Deposit held in a physical form are freely transferable by endorsement & delivery. Those in demit form can be transferred as per the procedure applicable to other demit securities.

MUTUAL FUNDS It is a type of investment where a number of investors money is pooled together & used by the fund manager (referred to as the Asset Management Company or AMC) to invest in underline securities in line with the objectives of the scheme. By this method you can achieve a much wider spread of investments than if you were investing directly in the underlying investments. It is generally accepted that by spreading your investment you are spreading your risk, therefore investing in mutual funds is considered to be lower risk than direct investment. When you invest in mutual funds you do not own the underlying investments but have a claim to a number of units in the fund representing the size of your investment. The value of each unit of the mutual fund scheme, calculated based on the market value of the underlying investments after deducting expenses and liabilities, is referred to as the Net Asset Value or NAV.
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The first time a mutual fund scheme is available for purchase is referred to as a New Fund Offering or NFO.

Important Characteristics Of A Mutual Fund A mutual fund actually belongs to the investors who have pooled their funds is in the hands of the investors. Investment professionals and other service providers, who earn a free for their services, from the fund, manage a mutual fund. The pool of funds invested in a portfolio of marketable investments. The value of the portfolio is updated every day. The investors share in the fund is denominated by units. The value of the units changes in the portfolios value, every day. The value of one unit of investment is called as the net asset value of NAV. The investment portfolio of the mutual fund is created according to the stated investment objectives of the fund.

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Types of Mutual Funds

There are thousands of different mutual funds offered on the market. They range from funds that include a broad variety of investments to funds that invest exclusively in single securities or narrow sectors of the market. With the many different investment styles and objectives, theres bound to be a number of mutual funds that are suited to your investing profile. Each of these funds has expense, risk, and return characteristics. Be sure you understand these characteristics before you invest. There are 15 principal types of funds. We have listed them according to their primary objectives: growth, income, and specialized.

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Balanced Funds Balanced funds seek to obtain the highest return consistent with a low-risk strategy. They hold a mix of common and preferred stocks, bonds and cash reserves. The mix can vary according to current market conditions. Balanced funds usually offer higher yields than pure stock funds. Balanced funds are generally the least risky of growth-oriented mutual funds.

Growth and Income Funds Growth and income funds attempt to achieve both long-term growth and current income. They invest primarily in high-yield common stock, preferred stock, and convertible debt (bonds) to generate both growth and income. Because they include a mix of investments, these funds are typically less risky than growth funds.

Growth Funds Growth funds seek long-term appreciation by investing in the stocks of established companies that may be poised for growth. These companies typically pay low dividends yet offer the potential for long-term capital appreciation. Some growth funds limit their investments to specific sectors of the economy. Growth funds are generally less risky than aggressive growth funds.

International and Global Growth Funds International and global mutual funds offer diversification into international stock markets. International funds invest only in foreign securities. Global funds, on the other hand, can invest in foreign and U.S. securities. The risks associated with
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investing on a worldwide basis include differences in regulation of financial data and reporting, currency exchange differences, as well as economic and political systems that may be different that those in the United States

Aggressive Growth Funds Aggressive growth funds, sometimes known as "small-cap" funds, seek maximum capital gains. They invest primarily in the stock of smaller, less established companies. Since these companies generally pay little or no dividends, aggressive growth funds rely on capital growth for returns. These funds tend to be the riskiest of growth-oriented mutual funds. Money Market Funds Money market funds seek current income while maintaining a stable $1.00 per share net asset value by investing in short-term debt securities, including T-bills, certificates of deposit, commercial paper, and other highly liquid and safe securities. They offer modest current income and no potential for capital gains. They generally offer the lowest returns but the most safety of all fund types. Some money market funds also offer tax-free income. Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 a share, it is possible to lose money by investing in the fund.

Government Securities Funds Government securities funds invest primarily in Treasury and government agency securities. Because they are issued or guaranteed by the U.S. government, they are considered the credit worthiest alternatives available

Government securities offer moderate current income and high safety. Treasury securities are backed by the full faith and credit of the U.S. government as to the timely payment of principal and interest. Government agency securities are not considered government obligations and therefore are not backed by the full
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faith and credit of the government. The principal value of these funds will fluctuate due to changes in interest rates. Municipal Bond Funds Municipal bond funds seek tax-free income by investing in the bonds of state and local governments. In many cases, it may be wise to consider municipal bond funds issued by your state because they may offer double or even triple tax-free income. In some states you will have to pay income tax if you buy shares of a municipal bond fund that invests in bonds issued by other states. In addition, while some municipal bonds in the fund may not be subject to regular income taxes, they may be subject to federal, state, or local alternative minimum tax. If you sell a taxfree bond fund at a profit, there are capital gains taxes to consider. As with all types of bond funds, the principal value will fluctuate with changes in interest rates. Corporate Bond Funds Corporate bond funds invest in debt securities issued by corporations. The risk of corporate bond funds may vary depending on the objectives of the fund. Because credit risk is somewhat higher, these funds may offer higher returns than funds specializing in government securities. Principal will fluctuate with changes in interest rates.

High-Yield Bond Funds High-yield bond funds seek to maximize current income by investing in lowerquality high-yielding corporate bonds. The bonds held by these funds are generally rated BB or lower by rating agencies. They offer the high current yields to compensate for the greater risk of default. Since they are more volatile than and pay higher yields than investment grade bonds, they tend to be suited to investors with a high degree of risk tolerance.

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Sector Funds Sector funds invest in specific industries or sectors of the economy, such as communications, aerospace and defense, or health care. While they may be diversified within a particular sector, they lack broad diversification. This increases their investment risk. These funds typically seek long-term capital appreciation.

Growth-Income Funds Growth-income funds are specialists in blue chip stocks. These funds invest in utilities, Dow industrials, and other seasoned stocks. They work to maximize dividend income while also generating capital gains. These funds are suitable as a substitute for conservative investment in the stock market.

Income Funds Income funds focus on dividend income, while also enjoying the capital gains that usually accompany investment in common and preferred stocks. These funds are particularly favored by conservative investors.

Asset Allocation Funds Asset allocation funds don't invest in just stocks. Instead, they focus on stocks, bonds, gold, real estate, and money market funds. This portfolio approach decreases the reliance on any one segment of the marketplace, easing any declines. A plus factor is limited by this strategy as well. Precious Metal Funds Precious metal funds invest in gold, silver, and platinum. Gold and silver often move in the opposite direction from the stock market, and thus these funds can provide a hedge against investments in common stocks.

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Bond Funds Bond funds invest in corporate and government bonds. A common misunderstanding among investors is that the return on a bond fund is similar to the returns of the bonds purchased. One might expect that a fund that owns primarily 8 percent-yielding bonds would return 8 percent to investors. In fact, the yield from the fund is based primarily on the trading of bonds, which are extraordinarily sensitive to interest rates. Thus, one could find a bond fund that was earning double-digit returns as the prime rate climbed from 4 percent to 6 percent.

In addition to mutual funds, there are money market funds, which are essentially mutual funds that invest solely in government-insured short-term instruments. Benefits of Mutual Fund Reduction in risk: Mutual funds invest in a portfolio of securities. This means that all funds are not invested in the same Investment Avenue. Holding a portfolio that is diversified across investment avenues is a wise way to manage risk. When such a portfolio is liquid and marked to market, it enables investors to continuously evaluate the portfolio and manage their risks more efficiently.

Reduction in transaction costs: Through the individual investors contribution may be small; the mutual fund itself is large enough to be able to reduce costs in its transactions. These benefits are passed on to the investors. Portfolio Diversification: By offering readymade diversified portfolios, mutual fund enables investors to hold diversified portfolios. Through investors can create their own diversified portfolios, the costs of creating and monitoring such portfolios can be high, apart

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from the fact that investors may lack the professional expertise to manage such a portfolio.

Liquidity: Open-ended funds are very liquid as the Mutual Fund companies offer an open window for redemption on all working days. The redemption proceeds are normally dispatched within three to four working days.

Tax efficiencies: Investing in mutual funds is tax efficient. If investors choose the growth option and stay invested for a year, they only pay long term Capital Gains of 20.4% of indexed returns or 10.2% of un indexed returns (whichever is lower).

Diversification: Diversification is the core of any investment strategy. It allows you to minimize the risks associated with any investment. However, it is very difficult for individuals to have the requisite diversification for your investment given smaller portfolios and transaction costs. Mutual Funds can pool in the investments of thousands of investors and achieve the desired level of diversification for each.

FAQs

Do all mutual funds carry the same investment risks?

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No, they do not. Some mutual funds have been designed for investors who are cautious, while others for investors who are aggressive in their outlook to risk. There are also funds designed for investors having a balanced outlook on risk. You therefore need to decide what level of investment risk you are happy to accept and then choose a mutual fund scheme, which matches your appetite for risk.

How do I know which mutual fund scheme is right for me?

This will depend upon the level of risk you are prepared to take, your investment horizon, what your investment objectives are and whether you have a particular preference in the type of securities you would like to invest in. However before you invest you need to ensure you fully understand the features and risks relating to the mutual fund scheme you ultimately decide to invest in.

3. SYSTEMATIC INVESTMENT PLAN (SIP)

What is SIP?

An SIP is a regular investment plan for purchasing units of a mutual fund scheme. Offered by mutual funds to help you save regularly. When investing in mutual funds, you would normally identify a scheme & invest a predetermined amount in it at its prevailing net asset value (NAV). If you invest a sum of 10,000 at an NAV of .10, you will receive 1,000 units. The timings of your investment in such a case may turn out to be favorable or unfavorable.
38

Under SIP, however, your investment is staggered over a period. Instead of investing .10,000 at one go, you might consider investing specified amounts in a scheme at pr-specified intervals. For instance, you could spread out the 10,000 investment over 10 months, with Rs.1,000 being invested each month. The number of units that accrue to you on each periodic investment would depend on the NAV of the scheme prevailing at the time of your purchase. By doing this, you would have done away with the need to time the market. SIPs also in calculate some much needed discipline into your investing habits. . It is just like a recurring deposit with the post office or bank where you put in every month. The difference here is that the amount is invested in a mutual fund. The minimum amount to be invested can be as small as Rs.500 & the frequent investment is usually monthly or quarterly.

How does SIP works? An SIP allows you to take part in the stock market without trying to second guess movements. An SIP means you to commit yourself to investing a fixed amount every month. Let Rs.1000 When the NAV is high, you will get fewer units. When it drops, you will get more Date NAV Approx number of units you will get at 1000 100 95.23 90.90 105.26

Jan 1 Feb 1 Mar 1 Apr 1

10 10.5 11 9.5

39

May 1 Jun 1

9 11.5

111.11 86.95

Within six months, you would have 5,894 units by investing just Rs.1000 every month.

How does SIP scores? It makes you disciplined in your savings. Every month you are forced to keep assured amount. This could either be debited directly from your account or you could give mutual fund post-dated cheques. As you see above, it helps you make money over the long term. Since you get more when the NAV drops & fewer when it raises, the cost averages out over time. So over all the ups & downs of the market without any drastic losses.

Also, a number of mutual funds do not charge an entry load if you opt for an SIP a percentage of the amount you are investing. & if you do not exit (sell your units a year of buying the units, you do not have to pay an exit load) (same as an entry load, except this is charged when you sell your units). If, however, you do sell your units within a year, you would be charged an exit low pays to stay invested for the long-run. The best way to enter a mutual fund is via an SIP. But to get the benefit of an SIP at least a three-year time frame is needed when you wont touch your money

4. INSURANCE Insurance, in law and economies, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance.
40

Insurance rate is a factor used to determine the amount, called the Premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

A large number of homogeneous exposure units. Vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for E.g., covered about 175 million automobiles in the United States in 2004. The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called law of large numbers, which is effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. Lloyds of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent, large commercial property policies may insure exceptional properties for which there are no homogeneous exposure units. Despite failing of this criterion, many exposures like these are generally considered to be insurable

Definite Loss. Event that gives rise to the loss that is subject to insurance should, at least in principle, take placed at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory, Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable, Ideally, time, place and cause of a loss should be clear enough that a reasonable person. Accidental Loss. The event that constitute the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be pure, in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.

41

Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance Premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonable assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards (See FAS 113 for example), the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. Calculable Loss. There are two elements that must be at least estimatable , if not formally calculable exercise, while cost has more to do with the ability of a reasonable presented under that policy to make a reasonably definite and objective of the amount of the loss recoverable as a result of the claim. Limited risk of catastrophically large losses. The Essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issuer policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5%. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurers appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsures can be small
42

compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.

Insurers business model

Profit = earned premium + investment income - incurred loss - underwriting expenses.

Insurers make money in two ways: (1) through underwriting, the process by insurers selects the risks to insure and decide how much in premiums to charge for accepting those risks and (2) by investing the premiums they collect from insureds.

The most difficult aspect of the insurance business is the underwriting of policies. Using a wide assortment of data, insurers predict the likelihood that a claim will be made against their policies and price products accordingly. To this end, insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a based on a given risk. Actuarial science uses statistics principles aura used to determine an insurers overall exposure. Upon termination of a given policy, the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurers underwriting profit on that policy. Of course, from the insurers perspective, some policies are winners (i.e., the insurers pays out more in claims and expenses than it receives in premiums and investment income)

43

Types of insurance

Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as perils. An insurance policy will set out in details which perils are covered by the policy and which are not.

Below is a (non-exhaustive) list of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set forth below. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims form causing an accident). A homeowners insurance policy in the U.S. typically includes property insurance covering damage to the home and owners belongings, liability insurance covering certain legal claims against the owner, and even a small amount of health insurance for medical expenses of guests who are injured on the owners property.

Automobile insurance, know in the UK as motor insurance, is probably the most common from of insurance and may cover both legal liability claims against the driver and loss of or damage to the insureds vehicle itself. Throughout most of the

United States an auto insurance policy is required to legally operate a motor vehicle on public roads. In some jurisdictions, bodily injury compensation for automobile accident victims has been changed to a no-fault system, which reduces or eliminates the ability to sure for compensation but provides automatic eligibility for benefits.

Aviation insurance insures against hull, spares, deductible, hull war and liability risks.
44

Business insurance can be any kind of insurance that protects businesses against risks. Some principal subtypes of business insurance are (a) the various kinds of professional liability insurance, also called professional indemnity insurance, which are discussed below under that name; and (b) the business owners policy (BOP), which bundles into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners insurance bundles the coverages that a homeowner needs.

Casualty insurance insures against accidents, not necessarily tied to any specific property.

Credit insurance repays some or all of a loan back when certain things happen to the borrower such as unemployment, disability, or death. Mortgage insurance (which sees below) is a form of credit insurance, although the name credit insurance more often is used to refer to policies that cover other kinds of debt.

Crime insurance insures the policyholder against losses from the criminal acts of third parties. For example, a company can obtain crime insurance to cover losses arising from theft or embezzlement.

Crop insurance Farmers use crop insurance to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease, for instance.

Health insurance policies will often cover the cost of private medical treatments if the National Health Service in the UK (NHS) or other publicly-funded health
45

programs do not pay for them. It will often result in quicker health care where better facilities are available.

46

Review of literature HSBC named Best Trade Bank in UAE and Middle East Results of poll were announced recently at GTR's 7th Annual Middle East Trade and Export Finance Conference in Dubai. Kersi Patel, Regional Head of Trade and Supply Chain, HSBC Middle East: "Winning these awards are always an honor as it is recognition by our clients for the innovative services and products HSBC provides in the Middle East. Market conditions over the past 12 months have highlighted the strategic importance of a strongly capitalized trade and supply chain provider with global distribution capabilities and risk control frameworks."

"With more than 140 years of international trade experience and our extensive global network, HSBC provides it's customers with a unique combination of global reach with local knowledge. Our dedicated teams of trade and supply chain specialists enable customers to maximize their working capital potential, mitigate trading counter party risks and provide the best strategies for growth," he added. Speaking about trade in the UAE, Kersi said, "The United Arab Emirates is exceptionally well positioned as the trade gateway to the region for Middle East based importers and exporters with cross-border trade conducted by entrepreneurial importers and exporters being a critical component of the economy." "With almost universal presence in the Middle East and presence in all major commercial cities in the world, HSBC is uniquely placed to support business needs of Middle Eastern corporate at both ends, thereby making it easier for them to break into and grow their business in global markets," he added. The survey reflects the opinions of readers of Global Trade Review, who cast their votes to select their preferred trade bank. Winners were chosen based on the institutions' performance in the trade, commodity and export finance markets
47

during 2009.HSBC Trade and Supply Chain is one of the largest trade services organizations in the world with dedicated trade services offices in over 60 countries and territories worldwide. HSBC lowers UAE mortgage rates for new customers HSBC announced today it is decreasing its rates across its variable rate mortgage and Amanah Home Finance for new customers, effective immediately. First time buyers and new customers with a 25% deposit can take advantage of HSBC's revised rate at 6.75% when purchasing a completed property. HSBC Premier Customers will receive a further reduction on the rate of 0.5% while HSBC Status customers will receive a reduction of 0.25%. Current HSBC mortgage customers will have their rates reviewed on 1st April 2010 in line with the bank's commitment to review rates every quarter. Ishrat Kiyani, Head of Premier and Wealth Management, UAE, HSBC said, "HSBC is very much open for business, and wants to provide more flexibility and choice for customers who are looking to own a home. Price valuations are currently very attractive in the housing market and our new reduced rate will make it easier for end-users to get affordable mortgage finance. "We understand that investor confidence has been low, however we believe that owning a home continues to be an extremely important decision for residents of the UAE. It is also key to point out that in attractive locations across the UAE, buying a home can be cheaper then renting." "With our new rate reduction and a variety of options at competitive prices, we continue to support the UAE housing market as well as what is important to our customers."HSBC mortgages are available to expatriates and nationals with loan terms of up to 25 years or until the age of 65, whichever occurs first.

HSBC launches world selection investment portfolios in the UAE HSBC Bank today announced the launch of an innovative range of investment portfolios for its customers that provide diversified global exposure to a mix of
48

asset classes. The investment portfolios will be available in the UAE, Bahrain, Oman, Qatar and Jordan. The HSBC World Selection Portfolios are globallydiversified, multi-asset growth portfolios that can hold both traditional investments such as bonds and equities, as well as modern assets including commodities and private equity. Many of these modern asset classes would not readily be accessible to the private investor. World Selection combines sophisticated investment techniques, a very wide range of global investments and the best investment skills available in the market, monitored around the clock by HSBC experts.There are five portfolios in the World Selection range that cater to different levels of risk and return. Each portfolio in the World Selection range offers the expertise of a range of some of the best fund managers, from throughout the world. These managers are handpicked by the extensive Multi-manager team at HSBC Global Asset Management to deliver steady long-term returns, with low levels of volatility. The portfolios will also hold passive instruments such as Exchange Traded Funds (ETFs) when it is considered these present a better risk/reward profile than actively managed funds. Ishrat Kiyani, Head of Premier Banking and Wealth Management, UAE, HSBC, said:"The steep declines in stock markets over 2008 have been a painful reminder of the risks inherent with putting all of your investment eggs in one basket. When researching this product launch, our customers have told us "I don't like the rollercoaster effect" and "I'm more interested in preserving what I've got than risking it all."

"That's why it is important to diversify geographically and to hold different asset classes in order to achieve good long-term results without taking a rollercoaster ride along the way. Research by HSBC (1) demonstrates that various asset classes will move in and out of favor at different stages in the economic cycle. By being truly diversified, this should, over the longer term, lead to smoother and more stable returns from your investment portfolio (compared to holding a single asset class)."
49

"The role of Multi-manager is critical as no single manager is likely to outperform in all market cycles at all times. All managers have different styles and understanding these styles will give an insight into the set of market conditions where a particular manager is likely to perform well. An added potential benefit of multi-manager is that it gives retail customers rare access to the best-in-class fund managers," concluded Ishrat. Minimum investment for the HSBC World Selection Portfolios is $250 per month or lump sum of $10,000 and the portfolios are available from HSBC Financial Advisers at any HSBC Bank Middle East branch. There is a 3% initial charge and an annual management charge ranging between 1 - 1.30% depending on the portfolio. Institutional investors remain focused on Middle East HSBC HSBC hosted over 150 fund managers, investors, and bankers to a conference in Dubai this week. The audience came from all over the world, and they heard HSBC's top team of global and regional economists and analysts discuss and debate the future with traders and bankers. The message that emerging markets' growth will outpace mature markets came across loud and clear. What was also apparent was the continued interest in the Middle East from the world's investment community. The event was well-attended by bankers and investors from across the Mena region, and Simon Cooper, CEO of HSBC Middle East, summed up the opportunity for these regional delegates in his opening remarks: "As the world's foremost Emerging Market bank, HSBC can give you an informed view of how the crucial Emerging Market-to-Emerging Market capital flows will develop, whether that is between Asia, Eastern Europe, or Latin America and us here in the Middle East." Speakers at the event included Stephen King, HSBC's Group Chief Economist, David Bloom, Global Head of FX Strategy, and Dilip Shahani, Head of Asia Research. They were joined by Middle East experts in equities, credit, rates, and economics.
50

"We saw a tremendous level of interest in the region from Asian and European market players. In spite of the uncertainty and difficult macro-environment, there is a real optimism and confidence in the long-term outlook for the Mena region, especially in terms of its interplay with other emerging markets, said Rafi Ahmed, Head of Global Markets for HSBC in Mena.

51

CHAPTER 4 RESEARCH METHODOLOGY

52

Research Objective

The main objective of my study is to find the main strategies, policies used & various sales promotional activities of HSBC bank . The data source being used under such type of study are mainly of 2 types: Primary Data: Secondary Data Among which the former is being taken through the research undergone on various organizing reforms . While the latter had been taken through different statistical approaches or we can say through different marketing reforms. SAMPLE PLAN: Data Source: Primary Data: The primary data are which are collected afresh and for the first time, and thus happen to be original in character The survey was carried out at various levels & the target group was retail investors, business men, builders, industrialists, exporters, doctors etc. Questionnaires were used as an instrument to collect the primary data.

This data was obtained by various promotion schemes likeCANNOPIES- we put canopies in front of various financial institutions like banks and other commercial places, people approach us and we give them the questionnaire to fill and provide the details of HSBC products.

53

Secondary sources: The Secondary data are those, which have already been collected and being processed through the statistical process. We got the secondary data through

PREVIOUS TRANSACTION RECORDS-

We got the records of those people who have already invested in HSBC. Through directory- We got the records of Exporters, Businessmen, architects etc. Population Definition

Element: Retail Investors, Business Men, Builders, Industrialists, Exporters, Senior Citizens, and others. Sampling Method- Simple Random Sampling Sampling Size- Based on ages, income area etc. Data collection- through directories, Previous records through friends and relatives

Modes of Marketing & Promotion

Directly Approaching:We directly approach people to invest like builders, investors, exporters, businessmen, & even general mass.

54

Canopies:We put canopies in front of Banks, Financial Institutions & other public gathering places. There we approach people and take their telephone numbers. & contact them or even in canopies itself make them invest.

Through Brokers:Major part of our promotion & marketing is done through brokers, because they are more reliable for knowledgeable. Thus people trust them.

SWOT ANALYSIS

55

STRENGTHS:Brand Name: The biggest strength is the tag of HSBC is going to be the largest group of MNCs. Compatible Price: Prices of different schemes of HSBC are much more compatible than others. Diversified Schemes: We have diversified schemes, which is an exception case of HSBC. Less Risk: Our debt schemes are 100% free form market risk. Even as our portfolio is that diversified so equities are also less risky than others. Easy procedures for account opening too: We have an easy system for opening the account as it includes investment & being named as saving account for the costumer future benefits. Debit cum ATM card facility: The main advantage of HSBCs Debit cum ATM card is that you can access this card through any VISA supported ATMs & withdraw your amount, without any single charge to be paid.

WEAKNESS:Prone to Market Risk: Mutual Funds depend on overall macroeconomic condition and market scenario.
56

Tough Competitions: There is a very tough competition because of large number of Asset Management Companies.

Incapability of Customers: HSBC only provides 2 types of account opening of which one is PVA (Power Vantage Account) under which an alb of 1 M is to be maintained & the second one is Premier Account , under which an alb of 25 M is to be maintained. This is sometimes beyond the reach of a middle class person.

OPPORTUNITIES:-

U.A.E Capital Market is Growing: So more & more new investors are interested in investments.

Tailor Made Products: We have tailor made products like sector specified schemes & even diversified schemes.

Branch Expansion: Large no. of branches are opening day by day and even we are trapping the countries having almost same type of socio-economic condition & even same culture etc.

57

THREATS:Tough Competition: As there are so many banks having almost same kind of schemes, so its tough to compete with.

Unawareness: Majority of population is not aware of HSBC brand name and even because of other banking facilities which are much cheaper than HSBCs services, so its hard to convince people.

Changing Scenario: Our market scenario is changing day-by-day i.e. our market is fluctuating, so this makes investor hard to invest.

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CHAPTER 5 ANALYSIS AND INTERPRETATIONS

AGRESSIVE iNVESTORS

Cash 10%

Equity Debt

Debt 40%

Equity 50%

Cash

59

Equity 75 Debt Cash 60 15

In the above table 75 investors in Equity, 60 in Debt, & 15 in Cash. Debt instruments are- Company fixed deposits, bonds, Government Securities fund, and Govt. Saving schemes, Pension Schemes Equity Instruments are- Equity funds diversified, Equity funds Sectoral Plan, Balanced Fund (Equity Portion), Equity IPO. Cash Instruments- Liquid Funds, Government Securities, Income Funds long Term (Including MIP). Aggressive investors comprises of 50% in Equity, 10% in Cash, 40% in Debt.
Moderate Investor

10%
Debt Equity Cash

30%

60%

60

Debt

90

Equity 45 Cash 15

In the above table 45 investors invest in Equity, 90 in Debt, & 15 in Cash.Debt instruments are- Company fixed deposits, bonds, Government Securities fund, and Govt. Saving schemes, Pension Schemes. Equity Instruments are- Equity funds diversified, Equity Funds Sectoral Plan, Balanced Fund (Equity Portion), Equity IPO. Cash Instrument- Liquid Funds, Government Securities, Income Funds Long term (including MIP)./ Moderate investor comprises of 60 % in Debt, 10% in cash, and 30% in Equity.
Conservative Investor

20%
Debt

10%

70%

Cash Equity

Debt

70

61

Cash

10

Equity 20

In the above table 20 investors invest in Equity, 70 in Debt, &10 in Cash Debt Instruments are- Company fixed deposits, bonds, Government Securities fund, and Govt. Saving Schemes, Pension Schemes. Equity Instruments are- Equity funds diversified, Equity funds Sectoral Plan, Balanced Fund (Equity Portion), Equity IPO. Cash Instruments- Liquid Funds, Government Securities, and Income Funds Long Term (including MIP). Conservative Investors comprises of 70% in Debt, 10% in Cash, and 20% in Equity.

Very Conservative Investor

Equity 10%

Cash 10%

Debt Cash Equity

Debt 80%

Debt

120
62

Cash

15

Equity 15

In the above table 15 investors invest in Equity, 120 in Debt, &120 in Cash. Debt Instruments are- Company fixed deposits, bonds, Government Securities Fund, and Govt Saving Schemes, Pensions Schemes. Equity Instruments are- Equity Funds diversified, Equity Funds Sectoral Plan, Balanced Fund (Equity portion), and Equity IPO. Cash Instruments- Liquid Funds, Government Securities, and Income Funds Long Term (including MIP) Very conservative investors comprises of 80% in debt, 10% in Cash & 10 % in Equit
No. Of Invesotors Found With Their Annual Icomes
70 60 50 40
Series1

30 20 10 0 60K1LAKH 1LAKH2LAKH 2LAKH3LAKH 3LAKHABOVE

63

60K-1LAKH

62

1LAKH-2LAKH 48 2LAKH-3LAKH 24 3LAKH-ABOVE16

In the above table 62 investors are those who fell in the income slab from 60 thousand to 1 lakh, 48 investors fell in the income slab form 1 lakh-2lakh, 24 Investors fell in the income slab from 2 lakh-3lakh, 16 investors fell in the income slab of above 3 lakhs.

64

Types of Investors
70 60 50 40 30 20 10 0 Aggressive Investors Moderate Investors Conservative Very Investors Conservative Investors

Aggressive Investors Moderate Investors Conservative Investors

18 60 47

Very Conservative Investors25 18 investors are found Aggressive, 60 investors are found Moderate, and 47 Investors are found Conservative & 25 Investors are found very conservative in the survey.

65

Investment made in % by the Investors

29%

25%

4 %

Upto 5%

5%-10%

up to 5% 5%-10% More Than 10%

38 69 43

In the above table 38 Investors up to 5% of their income, 69 investors invest up to 5%-10% of their income & 43 investors invest more than 10% of their income.

In the above graph 25% of total surveyed investors invest up to 5% monthly. 46% of the total surveyed investors invest up to 5%-10% monthly. 29% of the total surveyed investors invest more than 10% monthly.

66

More Than 10%

Investment Made For The Last Number Of Years

1-5 Years 16% 10 Years & Above 47%

5-10 Years 37%

1-5 Years

5-10 Years

10 Years & Above

1-5 Years 5-10 Years

24 55

10 Years & Above71

16% of the investors were investing since last 1-5 years. 37% of the investors were investing since last 5-10 years. 43% of the investors were investing since last 10 years & above.

67

Expectation Of Investors regarding their Investments to grow

25%

13%

Steadily At average Fast

62%

Steadily

20

At average92 Fast 38

In the above table 20 investors expected their investment to grow steadily.

92 investors expected their investment to grow at a average rate. 38 investors expected their investment to grow at a fast rate. In the above graph 13% of the surveyed investors expected their investments to grow steadily 62% of the surveyed investors expected their investments to grow at an average rate. 25% of the surveyed investors expected their investments to grow at a fast rate.

68

Perception of Investors with respcetive to returns

21%

15%

64%

Safety of Principal Earning return above inflation rate Earning High returns

Safety of Principal

22

Earning return above inflation rate96 Earning High returns 32

In the above table 22 surveyed investors gave more importance to safety of principal, 96 investors gave more importance to earning returns above inflation rate, 32 investors gave more importance to earning high returns. 15% of the surveyed investors had a primary motive of the safety of principal, 64% of the surveyed investors were more concerned about earning returns above inflation rate. 21% of the surveyed investors were more concerned about earning high returns.

69

Investor's Knowledge about various Investment Schemes

Good 23% Nil 8%

Nil Average Good

Average 6 %

Nil

12

Average 104 Good 34

In the above table 12 investors were found with no knowledge about various investment schemes, 104 investors were found with average knowledge about various investment schemes, 34 investors were found with good knowledge about various investment schemes. In the above graph out of total surveyed investors 8% were found with nil investment knowledge, 69% were found with average investment knowledge, 23% were found with good investment knowledge.

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Age Group of Various Investors

Between 20-30 17%

Between 30-50 32%

Above 50 51%

Above 50

Between 30-50

Between 20-30

Above 50

76

Between 30-50 48 Between 20-30 26

In this above table out of the total surveyed investors 76 investors are above 50 years, 48 are between 30-50 years & 26 investors are between 20-30 years. In the above graph 51% were above 50 years 17% were between 20-30, & 32% were between 30-50.

71

Occupation Status of Various Investors

Doesn't affect 16%

Not Secured 19%

Secured 65%

Secured

Not Secured

Doesn't affect

Secured

98

Not Secured 28 Doesn't affect24

In the above table out of the total surveyed investors 98 investors were found with job security, 28 investors were found with unsecured jobs & 24 investors were found in a no affect status. In the above graph 65% of the investors were in a state of secured jobs, 19% of the investors were in the state of unsecured jobs & 16% of the investors were in the state where this factor doesnt affect them

72

Family Status of Various Investors

None 14%

More than 2 1-2 dependents None

1-2 dependents 21%

More than 2 65%

More than 2

98

1-2 dependents32 None 20

In the above table out of the total surveyed investors 98 investors were those who are having more than 2 dependents, 32 investors were those who are having 1-2 dependents, 20 investors were those who didnt had any dependent. In the above graph 66% investors were those who are having more than 2 dependents, 21% investors were those who are having 1-2 dependents & 13% investors are those who having no dependents.

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Investor's approach in making an Investment decisions

Educated View 15%

Guess Work 37%

Friendly Advice 48%

Educated View

Friendly Advice

Guess Work

Educated View 22 Friendly Advice73 Guess Work 55

In the above table out of the total surveyed investors 22 investors took educated view before investment, 73 took friendly advice before investment & 55 made guess work. In the above graph 48% took friendly advice, 15% took educated view & 37% made guess work.

74

Views of the Investors if the stock market crashed down

Invest 29% Withdraw 19%

Wait 52%

Withdraw28 Wait Invest 79 43

Out of the total surveyed investors 28 investors were found in a state of withdrawal of money, 79 investors were found out in the state of wait & watch & 43 investors were found out in the state of more investment in the market if the market crashes down. In the above graph 52% will wait & watch 29% will invest more & 19% investors will withdraw their money.

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M A R K E T (F.D.) (M.F.) STAR QUESTION MARK

G R O W T H

CASH COW

DOG

(SIP)

(INSURANCE)

MARKET SHARE

STAR CATEGORY PRODUCT: These are the products that are not only market leaders but are also growing fast. By this study it can be analyzed that FD is a product of STAR CATEGORY. If we analyze the current status of investments, then all respondents have their investments & if they are provided with 10, 00,000

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then too they will invest a part of it in FD. Hence presently FD has a large Market Share & in future also its market share will increase but not decrease.

CASH COW PRODUCT: Such products are weak in both the factors i.e., low growth & low market share. The investment avenues coming in this category are SIPs. Professional have invested in SIP, but this is restricted to their future & SIP is best option for the businessmen. Rather people would like to invest money in post office. DOG CATEGORY PRODUCT: Products of this category are categorized by Dominant share & Low growth. The investments avenues coming in this category is INSURANCE. It is among todays growing sector. But if we point our consideration towards professionals, as it is in this study, then Insurance comes under Cash Cow. Its market share is large, but at the same time these people are less interested in it as a future investment avenue.

QUESTION MARK CATEGORY PRODUCT: High growth & Subordinate Share characterize these products. SHARES, MUTUAL FUNDS & BONDS comes under this category. At present they have low market share but growth prospectus of these products are very high.

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CHAPTER 6 FINDINGS

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The basic thrust of the research is to find out types of investors & their portfolio & their profile.

On the basis of questionnaire certain points are given to the investors.

Those investors who obtained between 160-260 are very conservative. Those investors who obtained between 261-340 are conservative investors. Those investors who obtained between 341-410 are moderate investors. Those investors who obtained between 411-480 are aggressive investors.

A. In the survey 18 investors were found aggressive out of the total of 150 surveyed investors. The asset allocations of aggressive Investors are as follows; They invest 50% in equity instruments, 40% in debt instruments & 10% in cash instruments.

B. 60 investors were found to be moderate Investors. The asset allocations of these investors are as follows; 60% of the surveyed investors invest in debt & 30% of the them invest in equity & remaining 10% of them invest in cash instruments.

C. 47 investors found to be conservative investors out of the total 150 surveyed investors. The asset allocations of conservative investors are as follows; 70% of them invest in debt instrument,20% of them invest in equity instruments, & 10% of them invest in cash instruments.
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D. 25 investors were found to be very conservative out of the total 150 surveyed investors. Their asset allocations are as follows; 80% of them invest in debt instruments, 10% of them invest in equity instruments, & 10% of them invest in cash instruments.

E. In the survey the data was obtained regarding the investment capacity of the investors also in order to get the purchasing power and financial efficiency of the investors. 25% of the total surveyed investors invested up to 5% of their monthly income. 46% of the total surveyed investors invested up to 5% to 10% of their monthly income. 29% of the total surveyed investors invested more than 10 to their monthly income.

F. The investment made for the last number of years is also taken into consideration to take into account their investment periods. 16% of the total surveyed investors were investing since last 1-5 years. 37% of the total surveyed investors were investing since last 5-10 years. 43% of the total surveyed investors were investing since last 10 years and above.

G. Expectations of the investors regarding their investments to grow were also found out because on its basis we can make out consumers investment decisions and consumers mind setup it was all psychological based. Out of the total surveyed investors only 13% expected their investment to grow steadily.

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Out of the total surveyed investors only 62% expected their investment to grow at average rate. Out of the total surveyed investors only 25% expected their investment to grow at a fast rate.

H. The most important part of this survey was to know about the perception of the investors with respect to returns. The following results were obtained. 15% of the total surveyed investors had a perception that safety of principal is their primary area of concern. 64% of the total surveyed investors had a perception that earning returns above inflation rate is their primary area of concern. 21% of the total surveyed investors had a perception that earning high returns is their primary area of concern.

I. As far as investors knowledge part regarding various investment schemes is concerned it was found that

69% of the total surveyed investors had average knowledge about various investment schemes. 8% of the total surveyed investors had no knowledge about various investment schemes 23% of the total surveyed investors had good knowledge about various investment schemes.

J. Age group was also a rational issue to know while carrying out the research. It was found that 17% of the total surveyed investors were between 20 to 30 years.
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It was found that 32% of the total surveyed investors were between 30 to 50 years. It was found that 51% of the total surveyed investors were above 50 years.

K. Occupation status is also a great factor to know because it affects consumer buying behavior and buying decisions. 65% of the total surveyed investors had secured occupation. 19% of the total surveyed investors were in the state of non-security of occupation. 16% of the total surveyed investors were in that state where occupation doesnt affect them.

L. To know about investment approach in making investment decisions gives significance to the research as by knowing this aspect we can conclude to a great extent about the type of investors. 37% of the total surveyed investors relied on guesswork. 15% of the total surveyed investors relied on the educated view. 48% of the total surveyed investors relied on the friendly advice.

LIMITATIONS

UNCERTAINITY OF MARKET:HSBCs securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved.

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As with any investment in securities, the NAV of the units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets.

LACK OF PUBLIC AWARENESS:Most of the people are unaware of it. So people are afraid to invest & they only trust of some govt funds like UTI, SBI, Govt. securities. Which give assured returns?

HIGH COMPETITION:Due to the existence of large number of AMCs & banks the competition is high. Investors are confused that where they have to invest and where not. Other bank also offers the same type of product/schemes which diversified the investors.

RIGID AND TRADITIONAL STRUCTURE:The people believe investing in Bank FDs and Post Office saving and are reluctant to invest in Mutual Fund. People like to secure money in terms of lending to the people on high interest they meant their amount is safe, or further to invest in their own business which will give them high return obviously. SOCIO- ECONOMIC FACTOR:The standard of living is low and people have low saving so investment in HSBCs schemes is low & beyond their capability. The most of the people of this country are agriculture dependent. So, they have less to invest. POLITICAL FACTOR:Due to volatile govt & their policies regarding investor & investment, the stock market is not integrated which in turn affects the mutual fund industry.

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QUESTIONNAIRE

NAME:

84

AGE:

20-30 30-50 Above 50

PROFESSION:

Entrepreneur Private Job Government Job Industrialist Exporter

INCOME LEVEL:

60,000 1, 00,000 1, 00,000 2, 00,000 2, 00,000 3, 00,000 Above 3, 00,000

FAMILY STATUS:

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Dependents

Non-Dependents

Have you ever invested in the market?

Yes

No

If Yes, What is your Portfolio?

Mutual Fund Insurance Shares Others

Are you aware of various HSBCs investment schemes?

Nil

Average

Fully

Have you ever invested in HSBC?

Yes
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No

If yes, youre Diversification (Mention your preferences)

Equity: Debt: Cash:

Please tick, I Am

First time Investor Regular

How long you are investing in market?

1-5 years 5-10 years Above 10 years

You made invested through:

Your own
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Through Distribution house Through broker others

Are you:

Long-term investor Short-term investor

What would you take into account while investing?

Safety principle Earning high returns Earning return above inflation rate

Views of the investor if the stock market crashes down:

Wait and Watch State of withdrawal State of more investment

What % of your income would you like to invest?

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Up to 5% 5%-10%

THANK YOU!!!

CHAPTER 7 CONCLUSION/RECOMMENDATIONS

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RECOMMENDATIONS

The investors above the age of 50 years must be taken into consideration as they are having great potential regarding investment. HSBC must lay down some sound strategies to trap more customers by giving them more commission in comparison to other investment centers. HSBC must use marketing tools like point of purchase, advertisement through Mass Media like loading Newspapers, Magazines, Television, Exhibition, Fairs, SMS on Mobiles, advertisement on the internet. The organization is lacking on the parameters of motivation. It is recommended that the organization must adopt the concept of motivation. HSBC should organize programs for customer awareness in developing areas and establish a confidence and belief among the customers residing there.

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CONCLUSION

From the analysis of the responses received from the investors, a majority of investors are found to be conscious and enlightened regarding their investments, return & growth.We have very good market in U.A.E which comprises potential investors but due to lack of basic promotion & publicity these investors are not fully aware of HSBC & whosoever is aware of it their investment decisions are done on the basis of security, analysis of risk yield & return few parameters like Demographic, Physiological, Income, etc.So my findings are that HSBC market should make little more efforts to trap the potential investors, like Media Advertisement, Paper Advertisement, Seminars & Business Meets & building a good relationship with potential business, moreover friendly guidance. BIBLIOGRAPHY

BOOKS: . Kotler Philip: Marketing in New Millennium, Millennium Edition Prentince Hall of India, New Delhi. C.R Kothari: Research Methodology; Wishva Publication, New Delhi. M.J Methew : Risk & Insurance Management

NEWSPAPERS:-

Gulf news khaleej Times.

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WEBSTIES: www.hsbc.co. www.hsbc.ae www.google.com www.yahoo.com www.ameinfo.com www.ehow.com

ABBREVIATION

SIP: Systematic investment plan TMD: Term deposit AMFI: Association of mutual funds of India AMC: Asset Management Company MF: Mutual fund

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Appendix

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