Lai See

CLSA pays respect to financial markets karma

PUBLISHED : Saturday, 12 January, 2013, 12:00am
UPDATED : Saturday, 12 January, 2013, 4:02am


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We have alluded in recent days to poor forecasting of financial indices and stocks by the broking industry. That has prompted the arrival of a couple of reports showing rather good forecasting prowess. The CLSA Global Consumer sector report starts off modestly with: "We had a lucky year with 2012. Our two top picks in Global Consumer (out of a total of 210 stocks) were Prada (up+110%) and Sands China (up+55%).

It transpires that the team has been "lucky" for the past four years in identifying Macau as its favourite consumer sector. But in an industry which is not usually backward in coming forward, aren't they being overly modest in describing the outcome as "lucky"?

Aaron Fischer, head of Asia consumer and gaming research at CLSA, says: "I certainly believe in financial markets karma. You need to be careful about how you describe your track record. If you have a good run it doesn't pay to get too cocky about it because it'll come back to haunt you and you'll probably have a bad run." CLSA's top picks in the gaming sector are Melco Crown and SJM, and in the Consumer sector CLSA thinks that despite last year's gains there's at least 20 per cent more to come for Prada, Samsonite and L'Occitaine.

Fischer and his team were not the only ones to get "lucky" at CLSA. The Asian oil and gas team comprising Simon Powell and Nelson Wang put their clients into Anton Oilfield Services at around HK$1 and have watched the stock rise more than 330 per cent over the past 12 months, making it Hong Kong 's best performing stock last year. But all good things come to an end. "We struggle to find a suitable valuation approach to justify current price levels and can only conclude that the market is pricing in blue-sky from shale gas, or is expecting much more growth than the sell side currently forecast," they wrote in a recent report calling time on the stock. Anton, which provides drilling and fracking services for oil and gas wells, has fallen by around 20 per cent since CLSA's recent sell recommendation.


SPRG in the fast lane

Hong Kong public relations firm SPRG has done well, surprisingly well some would say, in securing a deal with luxury sports car manufacturer Automobili Lamborghini. It will act as PR firm in its daily operations and major projects in China and selected countries in Asia-Pacific, according to Marketing magazine.

Aside from increasing familiarity to motorists, SPRG is being hired to build a more dynamic brand image of the label in the country, which is now Lamborghini's second largest market in the world as it celebrates its 50th anniversary this year. We'll know if SPRG has been successful when the children of senior party officials end up killing themselves at the wheel of a Lamborghini rather than a Ferrari, as they did in a number of highly publicised incidents last year.


Seeking happiness

We are looking forward with some anticipation to seeing what the Promoting Happiness Index Foundation and Hong Kong Productivity Council will come up with on Monday at their press conference.

This is the team, it will be recalled, that last year came up with Hong Kong's happiness at work index. The aim of this, according to its website, is "to help Hong Kong businesses enhance staff morale and create a delightful corporate culture conducive to standing against adversity …" It has to be said we have yet to experience the full benefit of this exercise.

However, on Monday the team takes its work a stage further with the launch of the "Happy Organisation Label Scheme". The implication appears to be that happiness in the work place can be enhanced by "happy labels". This appears fanciful but we don't want to prejudge. Gregory So Kam-leung, Secretary for Commerce and Economic Development, will be presiding over the event. Perhaps he should be renamed Secretary for Happiness.


Bad name syndrome

Li & Fung, the largest Hong Kong-listed trading and distribution company, yesterday warned its core operating profit would drop 40 per cent for the 2012 financial year which ended on December 31, mainly due to problems in its US subsidiary LF USA. The company replaced the president of its US operations in December. He was somewhat unfortunately named Richard Nixon Darling. A case of bad karma, perhaps.


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