2016 All-Asia Research Team: Basic Materials, No. 1: Rachel Zhang & team

Rachel Zhang & team

Morgan Stanley

First-Place Appearances: 5

Total Appearances: 9

Team Debut: 1998

Morgan Stanley’s regional basic materials researchers repeat in first place.Rachel Zhang, who works out of Shanghai, is now the ten-member crew’s solo leader. Her former co-captain, Chun Hung (John) Lam, has shifted to covering property names exclusively and, with Praveen Choudhary, guides his team to a runner-up showing on that lineup. Zhang, 39, and her associates win one client’s admiration for their combination of “regional coverage and ability to deliver profitable recommendations at the stock-picking level.” A second fund manager particularly values their reporting on the steel industry, as well as their expertise at “providing database maintenance for investors.” The analysts track more than 100 names in this space and find the sector attractive. Although its shares fell 10.1 percent during the 12 months through late April, that performance was better than the regional broad market’s 15.9 percent declined over the period. “For the next three to five years, we expect supply-side reforms to be a key focus in the oversupplied sectors — such as steel, coal and cement. Demand from infrastructure will help offset the slowdown from property,” Zhang reports. “With inventory generally at lower levels compared with previous years, and a lack of new supply, sector fundamentals are improving. The major issues companies will face will be slower-than-expected capacity cuts because of improved margins.” Morgan Stanley’s favorite names are all Chinese heavyweights. Among steel producers the researchers prefer Angang Steel Co., Baoshan Iron & Steel Co. and Maanshan Iron & Steel Co. In the cement and paper markets, they recommend that investors favor Anhui Conch Cement Co. and Lee & Man Paper Manufacturing. “Rachel is very close to the market,” another backer remarks. “I love her work and diligence — she’s very responsive and well connected.”