After the intense pressures on trading volumes and profit margins in recent years, few local stockbroking firms have attempted to maintain a comprehensive research package for institutional clients. Click here for all the tables.
Most have reshaped their businesses, focusing on key sectors or on areas where they believe they have a competitive advantage. In some cases, that has led to smaller research teams and narrower research coverage.
But Deutsche Securities still stands out for the breadth and quality of its services. It has led the overall research tables in the FM's annual rankings of analysts and broking firms since 1997. In this year's survey, the 28th, Deutsche again leads in research, as well as in sales and equities and fixed-interest dealing.
In equities dealing, the global banks usually have the advantage because of their large balance sheets and placing power. Merrill Lynch and UBS Securities respectively are second and third for equities dealing but a local player, Investec Securities, is fourth.
However, local firms do better in the rankings for dealing in fixed-interest securities. RMB Securities is second, followed by Barnard Jacobs Mellet (BJM), third, Standard Bank, fourth, and Investec Securities, fifth.
Of the 40 weighted research sectors, Deutsche (as a firm) is ranked first in only two, gold and commodities. But the firm appears in the top three in 23 of these sectors, and is in the top six in 30. None of its rivals comes anywhere near that record this year.
There are several other marked features of the research rankings. Other multinationals such as Merrill Lynch and JP Morgan continue to do well, despite having narrowed their focus. That, in part, is thanks to continued strong support from larger institutions.
However, several of the local firms, notably Nedcor Securities, BJM and Andisa Securities, have improved their performances, because of broader support from the institutions or top rankings in key sectors.
The latter point applies particularly to Nedcor Securities. Its analysts win or are highly rated in the resources sectors, which are always important in the SA market.
Dave Pleming again leads in other mineral extractors, where Anglo American and BHP Billiton are listed. Nedcor's Renč Hochreiter - for the 10th year - is the platinum leader. He also retains his lead in small and medium market cap resources companies. Gary Pearson is fourth in gold.
Investec Securities did well in equity sectors such as gold (second), luxury goods and tobacco (second), food (first) and retailers & furniture (first). However, its overall ranking was affected because it had little showing this year in the big financial sectors.
There are still few black analysts appearing in the upper rankings. However, BJM and Andisa (formed out of SCMB Equities) were both restructured after empowerment deals in the past couple of years. Andisa now appears in the top six in 19 of the firms' equity research sectors. BJM does so in 16 sectors.
For this year's survey, several adjustments were made to the methodology. First, respondents were asked to rank firms (teams) and analysts separately. Previously, firms' research rankings were derived by totalling the points gained by each firm's individual analysts across all the research sectors.
With teams and analysts ranked separately, there is greater assurance the tables will reflect the fund managers' intentions. However, fund managers may elect to rank firms and their analysts differently.
Second, fund manager weightings were further adjusted to reflect more closely the highly concentrated structure of the domestic institutional investment industry. This led to heavier weightings for larger institutions, though a few more of the smaller fund manager were included this year.
Third, in the overall rankings for research, JSE equity sectors were weighted by values in the shareholders' weighted index (Swix) instead of the all share index (Alsi), as in the past.
For some, this will be controversial - and none of these indices is perfect. But the Swix, which became available a year ago, has certain merits. Its values are adjusted to reduce or exclude non-SA shareholdings.
This pares the weightings of some counters, particularly Anglo American and BHP Billiton. It curbs the overall influence of the resources sector, which has a weighting of about 45% in the Alsi, much more than in most institutional portfolios.
Conceptually, the Swix also correlates more closely with other aspects of this survey. The aim is to capture the opinions of domestic fund managers on the research and other broking services produced for the local institutional market. In the weighted rankings, fund managers are weighted on their domestic assets (rather than total assets) under management.
However, the influence of some nonresources sectors such as banks is greater when the Swix is used.
The leading analyst in the banks sector this year is again First South Securities' Henry Hall, who led this sector for the previous two years. Second is Deutsche's Mike Gresty, who moved over during the year from BJM. And JP Morgan's Jacques Badenhorst is third.
JP Morgan this year wins the life assurance sector, with Sean Nossel taking a strong lead, having risen from third last year. Last year's winner in this sector, Stewart Rider, of Merrill Lynch, slipped to second. Citigroup Smith Barney's Johny Lambridis is third.
Among the industrial sectors, Cazenove's Julian Wentzel is the new leader in beverages. Last year's winner, Gavin Vorwerg, of Deutsche Securities, has relinquished coverage of this sector. However, his replacement, Paul van Meurs, has entered the rankings at joint fifth. Another previous winner, Grant Swanepoel of Citigroup Smith Barney, is now second.
The analysts' ranking in the food producers & processors sector has two joint winners, Renier Swanepoel of UBS Securities and Eric Levine of Investec Securities, but Investec leads the firms' ranking.
Rankings of analysts and firms also differ in the luxury goods & tobacco sector, covering Richemont and Remgro. Investec's Thane Duff is again the top analyst. But Merrill Lynch is the top firm, followed by Investec (second) and Deutsche (third).
Peter Armitage, a rated industrial analyst several years ago, returned to the industry last year - with marked success. Now at Nedcor Securities, he is first in diversified industrials, where he is followed by Citigroup Smith Barney's Ceri Moodie. Armitage is also first in the transport sector and third in media.
HSBC Securities' Franca di Silvestro retains the lead she held last year in the IT sector, and this year also wins in telecommunication services, where Investec's Nik Kershaw is second.
Marked changes occur in some of the key non-equity sectors. The sector for domestic economic trends is now led by BJM's Bruce Donald, who is also first in fixed-interest research.
However, Merrill Lynch is first in the firms' ranking in domestic economics. Deutsche, last year's economics leader, has slipped to third.
There is another new leader in investment strategy, where Cazenove's Peter Brooke is the top analyst, though Merrill Lynch retains the top spot it held last year in the firms' ranking. Brooke is followed by Merrill Lynch's John Morris, second, UBS Securities' Mary Curtis, third, and Investec Securities' Brian Kantor, fourth.
