Fool me once: Report points skittish investors to ‘most analytical’ firm

Fool me once: Report points skittish investors to ‘most analytical’ firm

Deutsche Bank tops list of companies with ‘most economic intelligence’. List is hoped to appease today’s emerging market investors, who tend to quickly pull out at first signs of trouble.

June 14, 2011 3:07 by Precious de Leon

This year is witnessing investments picking up—a majority of them being made in emerging markets in Asia, the Middle East and Africa.

However, while investors are willing to consider emerging markets, they are also quick to pull out at the first signs of trouble, especially with political instability and inconsistent reporting and disclosure still plaguing many emerging markets.

Investors, for example, were caught off guard by the near default of Dubai World in November 2009 when the emirate announced that it was unable to meet its obligations and requested a six-month freeze on its debt payments; markets around the world tumbled anew on the revelation. (The government of neighbouring emirate Abu Dhabi rode to the rescue that December with a $10 billion aid package.)

MR. ECONOMICS

So with regional instability and the unprecedented levels of government intervention in markets in the wake of the crisis, macroeconomic research is understandably at a premium. And in the emerging EMEA markets no one provides better insights, investors say, than the Troika Dialog quartet, which is conducted by 56-year-old Moscow-based economist Evgeny Gavrilenkov, who is ranked world No. 1 in Economics, according to an article in financial publication Institutional Investor (II).

But for investors, who do not have access to Gavrilenkov, can take their pick from II’s list of companies who have the ‘most economic intelligence’.

So there is clearly a space to be filled for an expert that can help investors, who have been burned by the economic meltdown, to navigate through these familiar territories in these unfamiliar times.

And that’s why II released the ‘Emerging Markets Equity & Fixed-Income Research Team’ list. The new study covers Central and Eastern Europe, the Middle East and all Africa and across a number of industry sectors and macro-economic disciplines. In lay-speak, the study looks which company has the most the all encompassing and expansive coverage of macroeconomic activities in the most number of markets.

THE WINNER’S LIST

So which company has the most number of analysts—and therefore intelligence—dedicated to emerging markets?

Here’s the top three:

1 – Deutsche Bank

Deutsche Bank has 50 analysts dedicated to emerging markets, seven of whom were added over the past year. The company follow 325 companies, up from 319 one year ago. Local placement of team members has been key to the firm’s success, according to London-based Richard Smith, head of equity research for all of EMEA.

The company has 14 analysts in South Africa, 11 in Russia, seven each in Turkey and the UAE, four in Poland, two in Israel and one in Hungary. It also has four analysts overseeing these markets out of the bank’s London office. There are also plans to hire an analyst, who will be based in Johannesburg, later this year to cover sub-Saharan Africa, beginning with Nigeria.

2 – BofA Merrill Lynch Global Research

BofA also has 50 analysts covering the region, three of whom the firm hired in the past 12 months, and expanded coverage by about 10 percent, to 220 stocks. The company, which is reinforcing its Saudi Arabia coverage, admits the growth has been due to client demand. The firm has researchers in the Middle East, Russia, South Africa and Turkey.

3 – Renaissance Capital

Renaissance Capital (RenCap), whose Russian research operations have been hard hit by analyst departures, has been among the firms expanding most aggressively, particularly in Africa.

RenCap’s analyst head count has nearly doubled over the past year, from 41 to 78, and those analysts follow a whopping 540 stocks—105 more than the firm covered last year at this time. The company plans to add more analysts, hoping to have 93 in place by the end of the year.

In July the firm completed its $27.3 million purchase of Johannesburg-based BJM Securities, picking up a troop of 21 analysts who cover 70 local companies. RenCap also has four analysts in Nigeria and two each in Kenya, Zambia and Zimbabwe.

Survey results are based on responses from nearly 500 individuals at more than 340 institutions globally managing an estimated $395.75 billion in emerging-markets equities and $108.75 billion in fixed-income assets.

The complete list of winners can be found on our web site, www.institutionalinvestor.com.