After a dip from the late 1990s financial crisis and postmillennial bubble, stock trading volume in Asia has been on the rise. Outside the US 1,700 sell-side analysts track these equity markets. With analysis from StarMine, a San Francisco research outfit, we have identified the best analysts across Asia when it comes to buy, sell or hold advice.
Founded in 1998, StarMine has built its business on a simple premise: Certain analysts are more worth listening to. To find these individuals in Asia (ex-Japan), StarMine analyses stock recommendations and earnings estimates from each of 1,700 analysts tabulated by financial data organization Thomson Financial. StarMine based the following designations on analysts' stock picks versus industry benchmarks between July 2005 and June 2006.
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These ten analysts had the highest overall "excess returns." For each stock touted by an analyst, StarMine calculates how much the stock exceeds or lags its industry benchmark, a market capitalisation-weighted portfolio of all stocks in each industry.
The excess returns are weighted according to the strength of the recommendation. A "strong buy" carries twice the weight of a "buy." To calculate the analyst's overall excess return StarMine adds up the recommendation-weighted excess returns. For example, if a stock gained 10 per cent while the industry benchmark rose 4 per cent, the analyst would get a 6 per cent excess return if he had a "buy" on the stock, 12 per cent with a "strong buy," zero per cent with a "hold," --6 per cent with a "sell" and --12 per cent with a "strong sell." The returns are further weighted to reflect the analyst's mix of industry coverage.
These pan-Asia awards exclude Japan because of the lack of coverage overlap between Japan and the rest of the region.
1. Peter Bai | China International Capital (Excess return: 110%)
Bai's recommendations on Hong Kong and China real estate and insurance stocks outperformed their benchmarks by 110 per cent for the 12-month period ended in June. His best call: China Overseas Land & Investment, a publicly traded subsidiary of state-owned China State Construction Engineering, the country's largest construction outfit. China Overseas develops and manages commercial and residential real estate in mainland China, Hong Kong and Macau. During the 12 months when Bai maintained a "buy" on China Overseas, it went up 232 per cent.
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2. Stanley Chou | KGI Securities (Excess return: 59%)
Chou covers Taiwanese technology hardware and electronic equipment stocks. His best pick was a 12-month-long "outperform" recommendation on High Tech Computer, a contract manufacturer of handheld computers and smart phones and a favorite of several of the StarMine top ten analysts. High Tech gained 303 per cent during the "buy" period.
3. Kitti Hamnilrat | Seamico Securities Public (Excess return: 52%)
Hamnilrat's coverage of Thai stocks encompasses industries ranging from real estate to retail and household durables. Best call: a "strong buy" on Erawan Group, which develops and manages hotels, office buildings and shopping centers in Bangkok. This 12-month long position gained 160 per cent.
4. Arthur Hsieh | UBS (Excess return: 42%)
Hsieh watches Taiwanese and Hong Kong stocks. His best-performing bullish recommendation was handset manufacturer Foxconn International, which is based in Hong Kong but is majority-owned by Hon Hai Precision of Taiwan.
Shares of Foxconn rose 129 per cent while Hsieh had it as a "buy." Other strong calls were High Tech Computer, up 92 per cent, and printed circuit board maker Unimicron Technology, up 54 per cent. Hsieh remains bullish on Foxconn and High Tech and has added Hon Hai to the top of his buy list.
5. Raymond (Nicky) Franco | Abacus Securities (Excess return: 40%)
Franco covers stocks in the Philippines. His best pick was Philex Mining, a copper, gold and silver mining company, which rose 287 per cent. He made another timely pick with Paxys, which operates call centers. During the time that Franco had a "strong buy" recommendation--from September 2005 to June 2006--shares of Paxys gained 114%. His current top three picks are Apex Mining, Philodrill and Ionics.
6. Jesal Shah | J.P. Morgan (Excess return: 39%)
Shah covers Indian health care stocks. His most profitable pick: Cipla, which went up 121 per cent. Based in Mumbai, Cipla manufactures prescription and over-the-counter drugs, veterinary pharmaceuticals and chemicals. Its drugs treat ailments such as asthma, cancer, inflammation and depression.
7. Vinod Chari | ABN Amro (Excess return: 39%)
Chari covers a range of Indian industries, including automobiles, utilities and metals and mining companies. Top calls include Voltas, up 235% during the rating period; Siemens India, up 104 per cent; and Bharat Heavy Electricals, up 110 per cent. Despite their run-ups, Chari remains bullish on all three equities.
Voltas, 28 per cent-owned by Indian industrial conglomerate Tata Group, provides air-conditioning and engineering services. Siemens India, 55 per cent-owned by Siemens of Germany, manufactures and distributes industrial equipment. And Bharat Heavy Electricals is the largest energy equipment manufacturer in India.
8. Hyerin Lee | Kyobo Securities (Excess return: 38%)
Working out of Seoul, Lee covers health care, household products and personal care products and made the top ten list with picks such as Chong Kun Dang Pharmaceutical, which went up 71 per cent. Lee also had good timing on Hanmi Pharmaceutical, by alternating between "buy" and "hold" recommendations during the 12-month scoring period.
9. Johnny Chan | J.P. Morgan (Excess return: 36%)
In his coverage of technology hardware, household durables and electronic equipment in Hong Kong and Taiwan, Chan's best pick was High Tech Computer, which climbed 275% while rated "overweight." Another good call was Foxconn Technology, up 87 per cent. (Note: Chan left J.P. Morgan in June.)
10. Simon Lee | BNP Paribas (Excess return: 36%)
Lee's coverage of media, software and services included a trio of triple-digit gains. CJ Internet was up 183 per cent. Formerly called Plenus, CJ Internet operates an online game portal in Korea. The other big winners were NHN, which operates several Web portals and posted a 139 per cent gain, and online shopping site Interpark, up 125 per cent. (Note: Lee has left BNP Paribas.)
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