AQ Bolsters Analyst Tracking in Asia

The company is planning to launch AQ reports for Asia in the next six months, which analyze the difference between analysts' earnings per share (EPS) forecasts and actual company results, says Iain Reed, Asia correspondent for AQ Research. The AQ report will be aimed at the top 300 companies in Asia and will offer two geographical reports, one covering the Japanese market, and one covering Asia-Pacific excluding Japan, he adds.

The AQ methodology, which was developed in consultation with fund managers in Europe, scores analyst EPS forecasts on a range of 0-100, on three measures: accuracy, number of revisions, and size of revisions. AQ Research in London already publishes reports on European brokers, and now plans to adopt the same methodology in Asia, Reed says.

AQ's other rating system is the RQ rating, which was used to rank 40 firms in Asia-Pacific by analyzing buy, hold and sell recommendations on the top 300 Asian stocks and the top 100 companies in Japan for AQ's latest report. According to this report, South China Research, a Hong Kong-based research house, provides the most accurate stock recommendations overall in the Asia-Pacific region.

South China Research received the highest overall score in Asia, excluding Japan, boosted by its property sector recommendations, AQ officials say. UBS fell to second place after placing first last year, although it took first in China, South Korea, Malaysia and Thailand as well as in three sectors: banks, construction and financial services.

The RQ report scores research houses based on their accuracy of recommendations in either absolute or relative terms depending on the type of recommendation made. Absolute recommendations are scored on the basis of the percentage change in share price movement, while relative recommendations are measured on the price movement relative to a country or sector index.

"A positive RQ score means that a broker or analyst has added value with their recommendation on a particular stock. Out of 40 Asian brokers providing us with their recommendations … 21 had positive RQs," Reed says.

Rahul Jhaveri