Equity Research Ranking
for Chinese Security Firms

In an attempt to impartially assess the equity research competencies of Chinese sell-side firms, we have developed a unique ranking method. This method utilizes Adjusted Proportional Mean Absolute Forecast Error (MAFE) to determine the forecast accuracy of firms dealing with stocks listed in Shenzhen or Shanghai. In addition to the Prediction Accuracy Score, we also compute a Prediction Frequency Score to gauge the level of research activity undertaken by these sell-side firms.

Our assessment, based on the annual EPS projections for 2022, covered 78 sell-side firms and 2887 stocks listed in Shanghai or Shenzhen. The top three firms in terms of accuracy were First Shanghai Securities, Gamma Securities, and Donghai Securities. In terms of activity, the most proactive firms in making projections were Tianfeng Securities, Essence Securities, and Everbright Securities.

The updated ranking for 2023 will be available in mid-2024, once all listed companies have published their annual reports. Rankings segmented by sector can be provided upon request.

Our Adjusted Proportional MAFE approach has two primary features:

• It is adjusted for the timing of the predictions. Specifically, we have considered that forecasts generally become more precise when made at a later stage with more data at disposal. Thus, the time factor influencing the accuracy of predictions is eliminated from our computation and ranking.

• It is proportional as it compares the prediction accuracy of individual sell-side firms with industry averages.

Data sources: EPS projections and actual data from EastMoney accessible at https://www.eastmoney.com/.

Technical notes available upon request. Email: admin@oxbridge-econ.com.