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Technology Stocks : PCW - Pacific Century CyberWorks Limited -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (353)	2/19/2001 2:36:23 AM
From: ms.smartest.person	Respond to of 2248

Analyst forecasts get fresh look CATHY HOLCOMBE Monday, February 19, 2001 As the recent slow turnover on Hong Kong's stock market testifies, it is hard to find a reason to buy or sell stocks these days. Interest-rate sensitives have run too far, technology stocks are not quite safe yet and the only sure bet is uncertainty. Leave it to the quantitative analysts to find a different angle. HSBC's James Spence has come up with a trading idea based on agreement in analysts' forecasts. "Our studies show that stocks with a wide dispersion in analysts' forecasts perform better in periods of economic expansion, and perform worse in downturns," Mr Spence said. Dispersion measures the agreement factor in analysts forecasts. If a stock's forecasts are close, or "tight", they tend to perform worst during the good times. If there is less agreement - "wide dispersion" - they tend to perform worst in downturns. "For the period from January 1994 to the present day, we observe an excess return of 11.3 per cent on stocks with a wide dispersion in analysts' forecasts during economic upturns and a negative return of 3.25 per cent during downturns," Mr Spence said. "This can be explained in a practical fashion. All else being equal, the tendency for stocks to outstrip market consensus forecasts is greater in bull markets. Where these forecasts are widely dispersed, the market has relatively poor visibility of future earnings, therefore the potential surprise factor [measured against a consensus mean] is greater." Thus stocks where analysts agree on the outlook tend to be worse performers because the good news is generally already priced in. These stocks can be valuable in times of uncertainty. "Stocks with tight dispersion in forecasts have valuable defensive characteristics," Mr Spence said. If you are feeling bullish, HSBC recommends buying the following Hong Kong stocks on the basis of their "wide dispersion": China Everbright, First Pacific, Hang Lung Development, Henderson Investment, HKR International, I-Cable Communications, New World Development and New World Infrastructure, Pacific Century CyberWorks, Sino Land, SmarTone Telecommunications Holdings and Wheelock and Co. For bearish investors, HSBC recommends buying the following stocks based on their tight dispersion: Cheung Kong Infrastructure Holdings, Cosco Pacific, Dah Sing Financial Holdings, Dao Heng Bank Group, Esprit Holdings, Giordano International, Hang Seng Bank, Hong Kong and China Gas, Johnson Electric Holdings, Li & Fung, Liu Chong Hing Bank, South China Morning Post (Holdings), Wing Hang Bank and Wing Lung Bank. markets.scmp.com