Macroeconomic update: Europe
This article was produced by ELITE Connect and originally published on the ELITE Connect platform
Effectively responding to macroeconomic issues is undoubtedly one of the key drivers and influencers in any company’s communications, affecting both proactive and reactive plans and strategies. Here we take a look at the current main macroeconomic topics in Europe, and learn some top tips on how to tackle them.
This year got off to a good start for Europe in general, according to Matt Hall, co-head of UK corporate broking at Deutsche Bank. He observes, however, that despite some positives, the volatile political landscape means a cautious approach is recommended.
‘We’ve started 2017 with some encouraging macroeconomic data points – for example, the latest Purchasing Managers’ Index data shows the best momentum since 2011,’ says Hall. ‘But we cannot ignore that there is a lot of political risk and that will continue for some time. We have seen the European Central Bank become less dovish, and our economists predict an announcement of a tapering of quantitative easing toward zero later this year.’
Kiran Ganesh, chief investment office head of investment advice solutions at UBS Wealth Management, agrees that political factors will be a key driver of investor sentiment over the coming months. ‘The main current issues in Europe center mostly on the extent to which political uncertainties, such as Brexit and US election activity, will impact upon consumer confidence and growth,’ he says. ‘We’re also seeing the market responding to the weak euro, and investors and companies assessing the impact this has on supporting economic growth and the expansion of current account surpluses.’
In terms of how to address the impact of the macroeconomy on IR activity, going back to basics and focusing on consistency in company messaging is a good place to start, says Hall. ‘A company has to be pragmatic about what is driving sentiment in its share price,’ he explains. ‘You have to keep reminding the buy side and sell side about the long-term drivers of the business and where the opportunities lie. But you also need to remind them that you are aware of the broader macroeconomic uncertainty and, as a management team, you are focused on controlling what you can control.’
So what’s Hall’s advice for weathering bad times caused by macroeconomic issues? ‘It’s important to stay close to your shareholders and potential shareholders through both the good times and the bad times,’ he says. ‘The most effective IROs are those who can talk about the strategic side of the business as well as the numbers.
‘It is also important for IROs to establish a good internal network at their company as they might not know everything but they can be asked anything. Knowing the right internal person to ask to answer an investor’s question is very important.’