Singapore
Stock analysts.
How helpful is their advice, especially in this troubled market? Discussion.
Jun 11, 2008

Channel News Asia forum
Posted by workingtoohard
I recently spoke to a couple of research analysts about the stocks that they're covering in Singapore. The general impression i got was that these analysts are ineffective and scared crapless about even forming an opinion...
I'm convinced Singapore lacks real talent in the securities market. Most people are scared about taking a stand, and are just regurgitating stuff from management without any thought. The herd mentality is very strong. It's frustrating to even talk to these guys as they can't even communicate clearly their thoughts...

LTinvestor
You mean brain drain or ‘cow’ brain? Anyway, Singapore government always welcomes FTs (foreign talents) and seems like the (troubled) US guys are eyeing Singapore.

MIB
That’s because a lot of Singaporeans are linguistically handicapped. We can speak quite a few languages, but we are usually master of none.

Stockbasher
There are strict regulations in Singapore to protect the interest of investors. If you follow their opinion and lose big time, they may get sued..

workingtoohard
Good point regarding Singaporean's lack of language mastery. It's painful to be in a meeting with a bunch of Singaporeans (I'm not Singaporean) - they can't even form a coherent sentence.

Littlespeck editor: In America, they’re not doing much better either. Bloomberg reported the following report on June 6:

Analysts Lose 17% for investors in brokerage
Investors who followed the advice of analysts who say when to buy and sell shares of brokerage firms and banks lost 17 percent in the past year, twice the decline of the Standard & Poor's 500 Index.

Buying shares on the advice of Merrill Lynch & Co.'s Guy Moszkowski, the top-ranked brokerage analyst in Institutional Investor's annual survey, cost investors 17 percent, according to data compiled by Bloomberg.

Deutsche Bank AG analyst Michael Mayo's counsel to purchase New York-based Lehman Brothers Holdings Inc. lost 59 percent.

Citigroup Inc.'s Prashant Bhatia still rates Merrill ``buy'' after its 56 percent retreat from a January 2007 record.

Of the 38 analysts tracked by Bloomberg who follow stocks in the Amex Securities Broker/Dealer Index, 31 produced losses for investors.

Investors who bought brokerages on ‘buy' recommendations, sold when they switched to `hold' and speculated prices would decline when analysts said `sell,' lost 17 percent in the last year through June 3, compared with the S&P 500's 8.5 percent drop.

“One would expect that if there was any industry Wall Street estimates would be more precise on, it would be their own,” said Richard Weiss, who oversees US$60b as chief investment officer at City National Bank in Beverly Hills, California.

“But this particular debacle was so global in nature and pervasive, you can't blame them for missing this one.''

The Amex index of 11 companies fell 38 percent in the past 12 months as the meltdown of the subprime mortgage market forced the world's biggest financial firms to report US$386b of losses and write-downs.

Worst excesses

“Ten years ago, the expectation was that analysts would simply avoid the worst excesses,” Bove said in an interview.

“The idea was just to beat the benchmark. Today, analysts have got to make you money in both up and down markets. You don't have any excuse.”

Bove said other analysts may have made money-losing recommendations because they based their reports on brokerage earnings rather than examining risk in credit markets.

Analysts lost influence after 10 securities firms paid US$1.4b in 2003 to settle allegations that they used tainted research to promote investment banking clients.
Bloomberg