2016 Global Trends in IR

BNY Mellon Depositary Receipts group has very recently published their annual report on global trends in investor relations. With 550 companies surveyed from 54 countries, it is probably the most comprehensive barometer of the current themes in our industry. The report provides large amount of comparative information on how listed companies are adapting to the changing marketing condition, touching on topics such as budgets, allocation of management’s time for buy side meetings, reporting lines, use of sell-side, measuring team effectiveness as well as insights into evolving areas such outreach to ESG investors and the use of technology.

Firstly as a qualifier, lets consider the demand side dynamics for global issuers. Despite the inevitable short and medium term swings in investor appetite for a given asset class, market or industry evidence that investors all around the world are diversifying and are increasingly adding a global component to their portfolios. Our own analysis point to over 4,000 institutional investors who hold emerging market securities, versus only 400 in early 20oo’s. BNY Mellon’s own estimates point to number of investors that hold DRs (or, roughly translated as those with global mandates) has increased from from 3,261 in 2Q10 to 4,533 in 2Q15. This figure will, we believe,  continue to grow, and present opportunities in areas where a- investors previously held most domestic bias and b- have considerable assets under management in active management and c- see diversification opportunities globally.

With this backdrop, a couple of things to note from the survey:

  • IR teams are working harder to address the growing global investment opportunity.  This is evidenced by 1- investor meetings taken by C-suite executives and IROs inside and outside their home markets have increased by 12.6% compared to 2013 (from 250.6 meetings in 2013 to 282.3 meetings in 2015). 2- companies almost doubling their IR budget allocation to travel, from 12.8% in 2013 to 24.3% in 2015, which in turn is interesting to contrast with the slight decrease in companies holding analyst/investor days (63% to 59%).
  • Top 10 sources of new investor demand in five years time, according to surveyed companies, will split evenly between emerging and frontier market. US, UK, China, Germany and Singapore lead the pact.
  • Technology tools, such as  conference call/webinar and video conference calls has been increasingly used in toolkit of a global IR officer (72% in 2015 vs. 63% in 2013 and 41% in 2015 vs. 34% in 2013). With the management and IR team time relatively fixed, and the buyside universe expanding – there is no element of a doubt that tools that help reach new investors can increase reach and efficiency, at a fraction of a price. We are strong advocates of using new tools to tell a company story . Can any one see how virtual reality or 360 videos can be applicable to the world of investor relations?
  • Despite the wave of regulations on how investors will pay for research and cooperate access, brokers continue to dominate the company non-deal roadshows arena, however with some signs of this changing. 10% of companies have organised NDRs themselves, up from 5% the previous year. Interestingly, companies rely a lot less on brokers nowadays to provide them with post meeting feedback, and rate quality targeting and introductions at upmost importance.
  • Growing ESG focus – The survey notes that there has been a strong increase (from 37% to 46%) in companies who have strategies in place to communicate with key investors on corporate governance issues on a regular basis, with top issues addressed being Board composition (76%), Transparency and disclosure (71%) and Remuneration (60%). Despite that the actual number of investors who reach out to ESG focused investors is still low (30%), however likely to rise. There is evidence to suggest that institutional investors are increasingly committing to ESG-focused principles in their strategies — whether that be through a more active engagement as shareholders or divestment strategies. 

Source: BNY Mellon Depositary Receipts Market Review 2015, BNY Mellon Global Trends in Investor Relations 2015

Top Blogs from 2015

Over the year, our blog has covered a vast array of topics which we thought were of particular relevance to investor relations teams in emerging markets. To the best of our abilities, we have also been trying to keep up with and summarise key points from the vast amount of surveys, thought pieces and research papers landing on our desks each week discussing today’s rapidly evolving investment environment.

Of most interest to us were (as you might guess!) developments of new technologies impacting the fund and wealth management (…and consequently IR) industries, regulations around corporate access and investment research as well as potentially transforming developments Saudi Arabia, China and Iran – all of which heavily influence the thinking of global EM investor.

Below is a cross selection of articles from our blog that our regular readers found most interesting. We enjoyed hosting the blog this year, and we’re grateful for all the feedback we got so far. Please let us know how we can make it even better next year.

On Strategy:

Framework for a Successful IR Strategy

On Regulation:

Equity Commission Unbundling: 4 Questions to Consider (supplemented by a Brief History of the Dealing Commission)

Research Regulations: the Quest for Clarity

On Passive investing:

Understanding Active ETFs 

ETFs in 2020

Broader Developments in EMs:

Saudi Arabia Opens its Equity Market to Direct Foreign Investment

China’s Place in Emerging Market Club  (supplemented by a Brief Guide to China’s Equity Market)

Global Pension and Sovereign Funds:

Developments in Sovereign Wealth

Japan Pension Funds Go Global 

Digital Trends:

Are Investor’s Ready for a Digital Future (guest post)

Drivers of Innovation in Fund Management (supplemented by our own FinTech Dictionary)

Twitter Top 30 for IR Teams

If you found our blogs useful and think your colleagues would benefit from our thoughts and insights going into 2016, they may subscribe using this link. For more frequent update and news stories, please follow us on LinkedIn.

Happy New Year and see you in January!

Team Closir