Institutional Investor's Alpha Magazine - July/August 2008 - (Page 45)

Top Asian Analysts Hedge Fund Leaders Versus All-Asia Research Team This table shows rankings as determined by hedge fund managers compared with those as voted by all portfolio managers. Rank Hedge Allfund Asia 2008 2008 1 1 3 4 5 6 7 8 9 10 11 11 1 5 3 1 8 4 7 6 10 9 12 11 Total team positions Hedge Allfund Asia 2008 2008 20 20 16 14 13 12 10 8 7 4 1 1 26 18 24 26 10 19 13 17 6 7 2 4 Firm Citi Investment Research Goldman Sachs (Asia) UBS JPMorgan Securities Morgan Stanley Credit Suisse Merrill Lynch CLSA Asia-Paciﬁc Markets Lehman Brothers Asia Deutsche Bank BNP Paribas Securities (Asia) Macquarie Securities Asia 2005 from Macquarie Securities Asia, he replaced 45 of Citi’s 70 analysts and told them that, if they worked hard, he would give them the support they needed to be Asia’s top-ranked equity research group. Faure, a British national who has worked in Hong Kong for more than 20 years, delivered on his promise. Today he oversees 75 publishing analysts who cover 700 stocks. Citi’s research group includes Charles Cheung, who has led his team from No. 3 a year ago to the top spot in the Autos & Auto Parts sector. Anticipating sluggish auto sales, Cheung downgraded China’s entire auto-assembly industry in October, two weeks earlier than any other analyst. When he put that sell on the stock of Denway Motors, the price was HK$5.58 ($0.72); by this June it had fallen to HK$3.01. Equity research at the Hong Kong ofﬁce of UBS, which repeats at No. 3 despite losing several analysts to competitors, has been a forte of the Swiss bank for decades. Led by research director Julian Pickstone, who took over after Nicholas Pink moved to London last year to head up the ﬁrm’s European research operation, UBS has long emphasized stock picking and encouraged versatility among its analysts. Pickstone says that despite the turmoil at UBS’s head ofﬁce in Zurich, which has written down some $37 billion in subprime-related losses, his head count of publishing analysts has been reduced by only ﬁve, to 85, in the past year. JPMorgan, repeating in fourth place, should beneﬁt from its acquisition of Bear Stearns Cos. Although the bulk of the beleaguered investment bank’s hedge fund customers were in the U.S., it shouldn’t take long for the global JPMorgan to leverage Bear’s prime brokerage expertise in Asia. Even without it, JPMorgan has an acclaimed group of researchers, such as economist Frank Gong, whose team is No. 1 in China coverage. “We have been making more short-term, tradingoriented calls aimed at the hedge fund community,” says Gong, who has a Ph.D. in economics from the University of Pennsylvania’s Wharton School of Business and worked at the New York Federal Reserve Bank in the 1990s. In mid-May he downgraded China from over weight to neutral “largely due to the crude oil outlook, China’s inﬂation and price-control risks,” he says. In early July, after the MSCI China index had fallen almost 20 percent, he upgraded the country back to overweight. Ali Naqvi, head of Asia ex-Japan equity research for Credit Suisse, has led his ﬁrm from No. 10 in 2007 to No. 6 this year, overtaking CLSA (an arm of France’s Crédit Agricole), Deutsche Bank, Merrill Lynch and Lehman Brothers Asia. Naqvi oversees 70 publishing analysts who cover 735 stocks, and his group has taken steps to help hedge fund managers handle the recent market turbulence. “We are doing a lot of customized work for hedge funds, depending upon their strategies and requirements,” he explains. At Merrill Lynch — No. 7 for the third year running — Asia-Paciﬁc research head Joseph Osha says the ﬁrm’s new stock-rating system, which requires analysts to put price objectives on all stocks, both buys and sells, should appeal to hedge funds. “We think the changes should make it easier for hedge funds to generate positive returns based on our research, even in a bad market,” Osha adds. Many analysts say that their Asian hedge fund clients will likely emerge stronger from this year’s equity market troubles. “The future for hedge funds in Asia is still very great,” says Adrian Mowat, an equity strategist at JPMorgan in Hong Kong and a specialist in emerging markets. Mowat, whose team is a runner-up in the Equity Strategy sector, witnessed the arrival of hedge funds in Asia en masse earlier this decade and is encouraged by their ability to continue to bring in money. Part of the attraction, he says, is the ﬂexibility that hedge funds enjoy by shorting and using derivatives; as a result, many departments of his bank serve hedge fund clients. But, Mowat adds, the research needs of hedge funds aren’t that different from those of long-only clients: “They want ideas that will make them money.” Despite this year’s sell-off in Asian equity markets, strategists like Mowat and CLSA’s Wood are excited by the region’s growth prospects. Asia is poised to expand its gross domestic product by 7.6 percent this year, according to the Asian Development Bank. The growth is being driven by the strength of China, whose GDP is expected to increase by 10 percent, and India, forecast to see 8 percent growth. The ADB also predicts that inflationary pressures will recede slightly in 2009 as commodities prices moderate, ON THE WEB Visit www.alphamagazine.com for more information about the analysts hedge funds most admire, as well as details of how we compiled this exclusive list. JULY/AUGUST 2008 • INSTITUTIONAL INVESTOR’S ALPHA • 45 http://www.alphamagazine.com

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - July/August 2008

Institutional Investor's Alpha Magazine - July/August 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Mr. Big Goes Small The Good Guys: Adopt This School! Interview: Man's Great Hope Cover Story: The Gentleman Activist Strategies: The New Bankers Profile: Staying Alive Research Center: The Best of the East The Asian Sensations Alpha Bytes: Into the Light Unhedged: Commentary: Speculating on Washington

Institutional Investor's Alpha Magazine - July/August 2008

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