The first session of the first day of the IR Magazine Global Forum & Awards – this year taking place in Amsterdam – took on trade, tax and Trump with a look at the global economic outlook. Panelists discussed how unease about globalization has resulted in the rise of the strongman. Most notably taking the form of US President Donald Trump – who one panelist called ‘one of the most remarkable presidents in US history’. But the trade war, commented this panelist, is about the rise of China. Where it will go is hard to predict, the panel agreed, but noted that ‘if there’s no deal between US and China by the end of the year then the tariffs will automatically increase – so there’s clearly potential to escalate.’ The good news? The US seems to have started to choose its battles, picking China as the big enemy, meaning that the rest of the emerging markets and Asia won’t suffer as much. ‘The US and China are battling for influence and Trump needs friends,’ said one panelist.
Every IRO’s favorite European regulation, Mifid II was back on the agenda for the second session with panelists saying they had – finally – begun to see an impact. ‘We’ve noticed changes at sector conferences,’ said one. ‘Investors and potential investors are going but not necessarily asking to meet with us.’ There’s also been an increase in direct contact from the buy side, they agreed, adding that this was expected to increase further as the buy side builds out its in-house corporate access teams.
So far, the panelists said they had seen less impact on research, however, but noted that 2019 will be the year to watch. They also offered some tips – including using more local brokers, even if it means having to use more than one as you travel from city to city or from one region in the US to the next; and taking into account whether or not a broker has an agreement with the investors you want to see. This is a must in a post-Mifid world.
ESG is no longer just a buzzword is the message coming from the panel on the case of activists and how they’ve made ESG a new tactic. ‘This is one of the biggest trends,’ agreed the panelists, noting that passive investors are among the most active in voting on ESG matters and are often happy to lend support to more ‘active’ counterparts. ‘Before,’ said one panelist, ‘ESG was a buzzword but now it’s really become a material topic to discuss,’ noting that only this morning, Amundi had announced plans to integrate ESG into all funds by 2021.
‘From an IR perspective, you need to really understand what your investors think about these issues. Get the information and then maybe you can start to engage,’ advised the panelists.
‘Rather than telling stories, I wanted to be part of the story,’ was the quote of the session on IR careers, moderated by Gary LaBranche of NIRI, who spoke with panelists on the pros and cons of sell-side experience (knowledge of capital markets vs knowledge of the inner workings of the company for those who come to IR internally) as well as what makes the perfect IR team mix: internal, finance, sell side and a buy sider, and a balance of age, experience and background. As LaBranche pointed out, 20 percent of NIRI members now come from the sell side, though it was also noted that finding the money to pay such aspiring IROs can be tricky given the expectations some have.
A session on passive investing followed an excellent lunch, though the panelists pointed out that they ‘prefer the term index investing’. Whatever you want to call it, it’s moving into the ‘big time’ in Europe, they noted, with ‘flows into ETFs in Europe really accelerating’.
Though one noted ‘it will be difficult to become as efficient as the US market’, with so many different exchanges and regulations across the continent, Mifid II is likely to further accelerate ETF take-up.
They also offered some tips on IR engagement and basically ‘it’s business as usual.’ It’s important to understand how ETFs work, but there’s not a lot to do, the panel agreed – apart from the good IR you should be doing anyway.
Another quote of the day came from the crisis management panel, where one panelist stated that: ‘If you haven’t had a crisis you’re not a real IRO yet’, as the three-strong panel of IR professionals discussed past and (very) recent crises and just how prepared you can ever be. They also talked about deciding how important the two-way conversation, through IR in and out of the company, is. So is bringing out senior management when necessary. But most of all, no matter what the situation, it’s all about honesty. ‘The C-suite needs to make it clear if they do or don’t have an answer for something,’ noted one. ‘Be as honest as possible.’ And don’t forget your internal audience: ‘You don’t want employees to find out about their future on the 8 o’clock news.’
The final session of the day saw a member of the buy side and a member of the sell side discuss everything from Mifid II, where again the agreement was that the real impact would be seen in the next six months, to a debate on quarterly vs bi-annual reporting. While a snap poll at the start of the day saw 79 percent of delegates say they would support a move to six-monthly reporting, both panelists listed a number of issues with such a move. They did however note that as long as some information was provided quarterly, they would be happy to go without a full quarterly report.
They also voiced support for paid-for research – as long as they know that’s what it is – and offered some tips to make the most of any post-results conference call: keep the presentation short, focus on the Q&A, and don’t schedule it just after you send the release out and no one’s had time to read it! As one panelist declared: ‘I find that suspicious.’