2012 doesn’t seem to be any different from 2011. In fact it has gotten more difficult for equity analysts to make accurate predictions and decisions on quality stocks.
Xiaopo Wei, who has been with CLSA for five years now and previously Macquarie, highlights that current market conditions have prompted him and his team to do more in-depth market analysis and thorough investigations into selecting the best trades.
“Investors have become very savvy nowadays and I spend half the time persuading them why these trades are good,” says Wei. “Ongoing market volatility has made our job so much more challenging than what it used to be.”
Some of his best calls include downgrading Li Ning, a Hong Kong-listed Chinese sportswear manufacturer from underperform to sell as the stock dramatically plunged 53% from February to October. This is a substantial dip when compared to the Hang Seng Index (HSI) which declined by around 6% during the same period.
Wei admits that one of his flawed decisions was his over-optimism on Gome, a privately-owned electrical appliance maker headquartered in China. The company’s sales fell 22.4% year-on-year to Rmb23 billion (US$3.7 billion) mainly due to the cyclical slowdown in consumption and irrational price war initiated by chained stores.
And what about next year? Wei is relatively bearish as he believes that volatility will continue to plague equity markets and his decision making. Despite that, he thrives on the uncertainty and finds satisfaction in making the right calls.
During weekends, Wei enjoys catching up with his family – his wife, Xiaopin and his two-and-a-half year old son, Brian – both of who he says have been his pillar of support. Additionally, he enjoys photography, even bringing along his trusty Canon 5D on business trips.