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.