Commentary: When stock analysts move markets, should retail investors follow?

Retail investors should be cautious about buying or selling shares simply because they read in the news that an analyst has changed a recommendation, says NTU finance professor Roger Loh.

A close-up shot of a trader's hand on a trading platform. (Photo: iStock/primeimages)

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SINGAPORE: Shares of at least two Singapore-listed firms made headlines last month after their shares fell sharply following downgrades by stock market analysts.

OCBC shares tumbled nearly 6 per cent on Oct 7 after Citi cited softer-than-expected third-quarter earnings expectations and downgraded the bank to “sell”. Days later, Sheng Siong shares fell as much as 3 per cent on the back of a downgrade by Maybank to “hold” and a cut in target price.

How can a single analyst’s opinion have such a dramatic impact on a company’s share price? Should retail investors follow these recommendations?

NOT ALL ANALYST REPORTS INFLUENCE THE MARKETS

Analysts employed by financial institutions study the companies they cover, forecast their earnings and recommend whether investors should buy, hold, or sell their shares. Their research helps institutional investors assess what companies are worth, with the information ultimately reflected in market prices. A vibrant analyst research sector is therefore an important part of a well-developed equity market.

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But producing market-moving research is incredibly difficult. Thousands of investment professionals are constantly evaluating publicly-listed companies. For an analyst report to move a stock price significantly, it must offer new insights that investors have not yet incorporated into their valuations.

In a 2011 study where my co-author and I examined more than 150,000 analyst recommendation changes for US stocks, we found only about one in eight such changes were accompanied by a large stock-price movement in the direction of the change. Most had no discernible impact on share prices, when measured from the day the recommendation was issued through the following trading day.

To illustrate just how difficult it is to produce market-moving research, one in four analysts in our study never issued a single influential recommendation change. Even among those who had managed to move stock prices at least once, only one in five of their recommendation changes were significant.

WHEN DO STOCK CALLS BECOME MARKET-MOVING?

So, when does an analyst recommendation change become impactful?

Track record matters. Analysts who have moved markets before, won awards or have a history of issuing recommendations ahead of their peers tend to be more influential.

Recommendations that move away from the prevailing consensus, or are accompanied by earnings forecasts, are more likely to move stock prices too.

Company characteristics also play a role. Analyst recommendations tend to be more influential for smaller companies, growth stocks, and companies where analysts disagree considerably about future earnings.

These findings are based on historical US data but the underlying economic reasoning suggests that similar forces may operate here in the Singapore market.

Both the OCBC and Sheng Siong downgrades were accompanied by downward revisions to earnings forecasts. Citi's downgrade of OCBC was also clearly contrarian, going against the prevailing more positive views of other analysts.

WHAT IT MEANS FOR RETAIL INVESTORS

For retail investors, the crucial question is whether they can profit by following analyst recommendations they read about in the news. The answer is that it is difficult.

Stock prices react very quickly to influential recommendations. Our research finds that almost all of the stock-price reaction around recommendations occurs on the day the report is issued and the following trading day.

By the time retail investors read about a downgrade in the news, much of the price adjustment may already have occurred. Academic studies have nevertheless found that share prices can continue moving in the direction of analyst recommendation changes for up to a month.

Take the example of an investor who sold shares immediately after reading about the recent downgrades. They might have avoided further losses, but profiting from a single recommendation does not show that following analyst calls is a reliably profitable strategy.

To reliably capture profits, investors have to react to analyst recommendations quickly – typically within a day – and trade systematically across many recommendation changes rather than just a few selected ones.

That is extremely difficult for retail investors who may only learn about these changes after prices have reacted. They are therefore unlikely to replicate these returns, particularly after accounting for trading costs such as brokerage commissions.

This is why retail investors should be cautious about buying or selling shares simply because they read in the news that an analyst has changed a recommendation.

LOOK BEYOND THE BUY OR SELL RATING

This does not mean analyst reports are unimportant to retail investors. Their greatest value lies in helping investors understand companies rather than providing immediate trading signals.

Instead of focusing solely on an analyst’s recommendation or target price, investors should examine the assumptions behind the recommendation. What earnings growth does the analyst expect? What are the key drivers of profitability? What risks could cause the forecast to be wrong?

A downgrade does not necessarily mean a company's business has deteriorated. An analyst might still expect earnings to grow but conclude that the share price has risen too far relative to those prospects.

Different analysts can also arrive at different recommendations because they make different assumptions about future earnings, risks and appropriate valuations. Rather than seeing these disagreements as confusing, investors should use them to identify the uncertainties that matter most.

MAKE ANALYST RESEARCH MORE ACCESSIBLE

Access to analyst research also highlights the information gap between institutional and retail investors.

This is not unique to Singapore. Full analyst reports are often available only to institutional clients or customers of the bank or brokerage producing the research. Retail investors without such access typically learn about recommendation changes in the news, often after much of the stock-price reaction has occurred. Moreover, media reports rarely contain the detailed analysis underlying these recommendations.

In the past, retail investors might have lacked the time or expertise to digest lengthy analyst reports filled with technical jargon. Now, large language models can make it much easier for investors to understand these reports, compare analysts' assumptions, and identify key areas of disagreement. This makes access to the underlying research more valuable than ever.

Initiatives such as the Grant for Equity Market Singapore (GEMS) programme, which supports research coverage of companies listed on the Singapore Exchange (SGX), are therefore welcome. SGX also posts a selection of analyst reports on its website. Greater efforts by exchanges and brokerages to make more analyst research accessible would help narrow the information gap between institutional and retail investors.

Roger Loh is an Associate Professor and Deputy Head of the Division of Finance at Nanyang Business School, Nanyang Technological University.

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南洋理工大学金融学教授罗杰·罗表示，散户投资者不应仅仅因为新闻报道中看到分析师改变了建议就买卖股票。

交易员的手在交易平台上特写。（图片：iStock/primeimages）

这段音频由人工智能工具生成。

新加坡：上个月，至少两家在新加坡上市的公司的股价因股市分析师下调评级而大幅下跌，成为新闻头条。

10月7日，花旗银行将华侨银行（OCBC）第三季度盈利预期下调至“卖出”，受此消息影响，华侨银行股价暴跌近6%。几天后，马来亚银行将昇菘银行（Sheng Siong）的评级下调至“持有”，并下调目标价，昇菘银行股价也随之下跌3%。

为什么一位分析师的意见会对公司股价产生如此巨大的影响？散户投资者应该听从这些建议吗？

并非所有分析报告都会影响市场

受雇于金融机构的分析师研究他们所覆盖的公司，预测其盈利情况，并向投资者提出买入、持有或卖出股票的建议。他们的研究帮助机构投资者评估公司的价值，而这些信息最终会反映在市场价格中。因此，一个充满活力的分析师研究行业是完善的股票市场的重要组成部分。

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但要产出能够左右市场走势的研究报告极其困难。成千上万的投资专业人士都在不断地评估上市公司。一份分析师报告要想显著影响股价，就必须提供投资者尚未纳入估值考量的新见解。

在2011年的一项研究中，我和我的合作者分析了超过15万条美国股票分析师评级变更，发现只有大约八分之一的此类变更伴随着股价向变更方向的大幅波动。大多数变更对股价没有明显影响，从评级发布之日起到下一个交易日止，股价波动几乎可以忽略不计。

为了说明撰写能够影响市场走势的研究报告有多么困难，我们研究中有四分之一的分析师从未发布过任何有影响力的推荐调整。即使在那些至少影响过一次股价的分析师中，也只有五分之一的推荐调整是显著的。

股票看涨期权何时才能对市场产生影响？

那么，分析师的建议变化何时才会产生影响呢？

过往业绩至关重要。那些曾左右市场走势、获得过奖项或有过先于同行发布预测的分析师往往更具影响力。

与主流共识相悖的建议，或者附带盈利预测的建议，更有可能影响股价。

公司自身特点也发挥着作用。分析师的建议对规模较小的公司、成长型股票以及分析师对未来盈利预测存在较大分歧的公司往往更具影响力。

这些发现是基于美国历史数据，但其背后的经济原理表明，类似的因素也可能在新加坡市场发挥作用。

华侨银行和昇菘银行的评级下调均伴随着盈利预期的下调。花旗银行对华侨银行的评级下调也明显与市场普遍看好的观点背道而驰。

这对散户投资者意味着什么

对于散户投资者而言，关键问题在于他们能否通过采纳新闻中看到的分析师建议获利。答案是：很难。

股价对有影响力的投资建议反应非常迅速。我们的研究发现，几乎所有围绕这些建议的股价反应都发生在报告发布当天及其后的一个交易日。

当散户投资者在新闻中看到评级下调的消息时，大部分价格调整可能已经发生。然而，学术研究表明，股价在一个月内仍可能继续朝着分析师建议变化的方向波动。

以一位投资者为例，他在看到近期评级下调的消息后立即卖出了股票。他或许避免了更大的损失，但仅仅依靠一次分析师的建议获利并不能证明，跟随分析师的预测是一种可靠的盈利策略。

为了可靠地获取利润，投资者必须迅速对分析师的建议做出反应——通常在一天之内——并且系统地根据许多建议的变化进行交易，而不是仅仅根据少数几个选定的建议进行交易。

对于散户投资者而言，这极其困难，因为他们可能只有在价格做出反应后才能了解到这些变化。因此，他们不太可能复制这些收益，尤其是在扣除经纪佣金等交易成本之后。

这就是为什么散户投资者不应仅仅因为新闻报道中看到分析师改变了建议就买卖股票的原因。

不要只看买入或卖出评级

但这并不意味着分析师报告对散户投资者不重要。它们最大的价值在于帮助投资者了解公司，而不是提供即时的交易信号。

投资者不应仅仅关注分析师的建议或目标价格，而应仔细审视建议背后的假设。分析师预期盈利增长如何？盈利的关键驱动因素是什么？哪些风险可能导致预测出现偏差？

评级下调并不一定意味着公司业务恶化。分析师可能仍然预期盈利增长，但会认为相对于这些预期，股价已经上涨过高。

不同的分析师之所以会给出不同的建议，是因为他们对未来收益、风险和适当的估值做出了不同的假设。投资者不应将这些分歧视为令人困惑之处，而应利用它们来识别最重要的不确定因素。

让分析师研究更容易获取

获取分析师研究报告也凸显了机构投资者和散户投资者之间的信息差距。

这种情况并非新加坡独有。完整的分析师报告通常只提供给机构客户或提供该研究报告的银行或券商的客户。没有此类渠道的散户投资者通常只能从新闻中得知评级变更，而此时股价往往已经出现较大波动。此外，媒体报道也鲜少包含这些评级背后的详细分析。

过去，散户投资者可能缺乏时间或专业知识来理解冗长且充斥着专业术语的分析报告。如今，大型语言模型能够让投资者更轻松地理解这些报告，比较分析师的假设，并识别关键分歧点。这使得获取基础研究的价值比以往任何时候都更加凸显。

因此，我们欢迎诸如新加坡股票市场资助计划（GEMS）等举措，该计划旨在支持对新加坡交易所（SGX）上市公司的研究报道。新加坡交易所还在其网站上发布了一系列分析师报告。交易所和券商若能加大力度，让更多分析师研究报告易于获取，将有助于缩小机构投资者和散户投资者之间的信息差距。

Roger Loh 是南洋理工大学南洋商学院金融系副教授兼副系主任。

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