IR Monitor – 03 May 2023

This week’s news

The City’s status spasm

Barely a day seems to go by without London suffering another perceived blow to its status. In a Reuters Breaking Views podcast, William Wright, founder of the New Financial think tank, joins host Peter Thal Larsen to debate the roots of this malaise and what can be done to fix it. Wright puts forward the notion that this episodic spasm is “nothing new”. If we rewind 15-20 years, New York felt the same pang of anxiety about its future as a financial centre. Likewise, the lightning rod by which we quantify our financial health – the fall in the number of listed companies – is an issue with developed markets which has also hit Europe and US. Finally, Wright suggests that every unhappy listed company in the UK is unhappy in its own particular way. The stock exchange may have served them well in terms of initial expansion, but in many cases core economic activity has shifted from the UK and Europe to the US. While the UK may be feeling post-Brexit bruises and a squeeze from being caught between the global financial centres (in the US and Asia) perhaps we should take a slightly less self-centred position as we all begin to navigate this new economic landscape. New Financial are of the notion that most of the valuable work that has been done to reform UK markets has been done to downstream issues which can change relatively quickly e.g. regulations and the listing regime. The think tank believes greater benefit may be derived from upstream projects, such as examining the behaviour of UK pension funds and insurance companies, thereby making the most of our pools of long-term capital, which are second to none (bar the US).

How European markets have failed to challenge the US – the FT Big Read

The FT describes the failure of European markets to provide a strong challenge to the dominance of US markets. Recent challenges for markets, including the Covid-19 pandemic and the UK’s exit from the EU, have only further compounded difficulties faced by European markets with listings in Europe falling to their lowest point in a decade. The US continues to outperform Europe due to its strong technology sector as well as its monetary policy. European companies are increasingly choosing to list in the US or move a listing to US markets as the market environment in Europe remains particularly fragmented in comparison to the simplified structure in the US. Meanwhile, although private equity has stepped in due to low valuations, it is becoming increasingly difficult for these firms to list the companies they have bought – leading to an increase in the average length of time that private equity groups are owning companies.

What issues are IR professionals asked for advice on

IR Magazine has highlighted the key issues for business leaders when requesting support from IR professionals. According to the results of a recent survey, the c-suite and board most frequently asked IROs for support on messaging in 2022. Over 45% of IR professionals were asked for support on this while the next biggest issues were investor & market sentiment, and shareholder targeting & engagement. Elsewhere, although ESG remains a key focus area for investors and IR professionals, the report noted, it is no longer a top five challenge for most IROs. According to the survey, macroeconomic developments led to increased engagement with IR professionals from colleagues in 2022.

Conference or retreat?

Bloomberg has examined the latest solution to the monotonous problem of working indoors for 8 hours a day that’s quietly made a re-appearance. Enter the good old conference – a tried and tested way of networking, learning, and simply getting away from your desk.  Conferences aren’t just a way to escape office boredom; they offer a unique opportunity to directly sell, develop networks and relationships, and build trust through exchanging information. In fact, the parties and bars at conferences are where the real magic happens. Plus, conferences aren’t just limited to transactional trade shows; smaller gatherings, such as senior leadership and investor meetings, are increasingly shaped by a desire to swap the conference room for somewhere out in nature. A good way of escaping the monotony and politics of unbroken office life.

The ultimate IR gesture: corporate insiders increase stock buying

The Wall Street Journal notes research showing that there has been an increase in corporate insiders buying shares in their own companies as more than 1,000 officers and directors from over 600 companies did so in March – the highest number in a single month since May last year. More than half of all corporate insiders who bought stocks were from financial firms who may be expecting their companies’ stocks to recover amid more recent optimism (following the collapse of several US banks). The article suggests insiders buying stock is a positive sign for investors while some also believe this shows that the banking crisis is contained. However,  some market strategists have expressed more caution with one asking,  “are insiders buying because they need to support the stock price instead of because they think it is undervalued?”

And finally… A.I. now the favoured acronym during earnings reports

The release of ChatGPT in November sent shockwaves across the tech world and ignited a series of conversations about artificial intelligence on corporate calls that show no signs of stopping. AlphaSense, a market intelligence platform, has revealed that mentions of A.I. or artificial intelligence increased 50% from the fourth quarter of 2022 to the first quarter of 2023. Of the 2,007 companies hosting corporate calls since April 1, 334 mentioned A.I.. Big tech has extended its rally in this period, with Meta, Microsoft, and Google all reporting strong results, mentioning A.I. as a “generational shift”, and elaborating on how they will incorporate it into their core software and search products. Satya Nadella, Microsoft’s C.E.O., mentioned “A.I.” or “OpenAI” at least 29 times in his 15-minute introductory remarks to analysts last Tuesday, according to The New York Times.

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