Historic market volatility wreaked havoc on stock picking last year, but a ranking of brokers by the South China Morning Post and StarMine, a Thomson Reuters company, shows a select few were still able to get it right at a difficult time. Goldman Sachs took the top spot for recommendations on Hang Seng Index-listed stocks in the 2009 StarMine-SCMP Broker Rankings, which is based on performance last year. Credit Suisse and Citigroup ranked second and third, respectively. In the mid- and small-cap segment, Nomura was in pole position, with Goldman and Deutsche Bank Securities filling out the top three. 'It was very difficult, indeed, and there were many noises, anxieties and panic in the market, which often distorted the share prices,' said Franklin Chow, a utilities analyst at Goldman. 'We have to go beyond the noises and help our clients understand what is really important.' Mr Chow made a noteworthy 'buy/neutral' call last year on CLP Holdings, a Hong Kong power producer, suggesting the stock would outperform the benchmark without rising substantially. Last year CLP edged down just 1.22 per cent, compared with a 48.27 per cent decline in the Hang Seng Index. In making the recommendation, Mr Chow said, he went beyond standard fundamental and valuation analysis and tried to incorporate market context to better understand how the stock would sway with shifts in investor sentiment. With political and economic themes driving markets on a global level last year, brokers said they were increasing efforts to integrate multiple perspectives across different disciplines into their recommendations. 'Now there is a shift of emphasis towards making sure that the huge number of economists, commodities officials and the whole gamut of people involved in markets bring all of the assets that this firm has to offer into stock picking,' said Tim Andrew, head of company research for Asia Pacific at Deutsche Bank. Citigroup also used a value-added recommendation process to produce its recommendations, said Anil Daswani, head of research for Hong Kong at Citigroup. 'We tried to make sure that we incorporated all the correct macro views, country views and sector views,' Mr Daswani said. 'It's about making sure that you've got all the macro forces aligned and backing the call at the end of the day.' Nomura research analysts worked closely with in-house strategists Sean Darby and Paul Schulte to better understand the shifting forces driving the markets. That helped the analysts to make the right calls, said Stewart Callaghan, chief operating officer of the research team at Nomura. 'It was a macro-dominated year,' he said. And the strategists 'gave the stock analysts the right top-down framework in which to look at their companies'. Deutsche Bank said it tried to strengthen its stock recommendations by submitting them through a rigorous internal screening process. 'That process, which is pretty entrenched in the DNA here, has served us quite well over the past year,' Mr Andrew said. In addition to oversight, analysts also seemed to benefit from sticking to their core convictions about fundamental analysis. Kathy Chen, a telecom analyst at Goldman, made a noteworthy 'buy/neutral' call on PCCW for September through early November, just after it had been battered by selling pressure. 'The most challenging part was making the call to turn positive despite the stock reaching new historical lows,' Ms Chen said. 'But we focused on the fundamentals and valuations and stripped out the 'noise'.' Michael Tong, an analyst at Deutsche Bank, said that when making recommendations last year, it also helped to be 'more nimble' and develop a better sense of investor expectations. The Broker Rankings also measured earnings estimates, with UBS in first for the Hang Seng Index segment and Goldman for mid- and small-caps. In addition, brokers were also assessed on their calls on H shares. Firms were assessed in the Broker Rankings according to the average accuracy of their analysts' calls on the stocks they covered. Notable calls Goldman Sachs held a 'sell/neutral' on CITIC Pacific from October 20 through November 12 as it sank 54 per cent and underperformed the benchmark by 46 per cent. It maintained a 'buy/neutral' on CLP Holdings throughout last year as it went up 3 per cent, outperforming the benchmark by 52 per cent. Credit Suisse had an 'underperform' on China Petroleum & Chemical from November 28 through the end of the year as it dropped 9 per cent and underperformed the benchmark by 18 per cent. It had an 'underperform' on Li & Fung for the last 15 days of last year as it sank 13 per cent, to underperform the benchmark by 12 per cent. Citigroup kept a 'sell' on Hong Kong & China Gas from November 26 through December 31 as it slipped 14 per cent and underperformed the benchmark by 28 per cent. It also maintained a 'sell' on Hong Kong Exchanges & Clearing from the beginning of the year through June 25 as it plunged 46 per cent and underperformed the benchmark by 26 per cent. Nomura kept a 'strong buy' on Fubon Bank for the first six months of 2008 as it shot up 65 per cent and outperformed the benchmark by 77 per cent. It held a 'buy' on Cheung Kong Infrastructure from January 1 through August 17, as it climbed 24 per cent and outperformed the benchmark by 53 per cent.