IR Monitor – 12 March 2025

In this week’s newsletter:

• Why UK & European companies are building IR capabilities in the US. Liquidity & access to capital are increasingly appealing to non-US IR teams, argues Oskar Yasar
• CEO tenure declines as both boards and investors become less patient. Bloomberg blames FOMO: chief executives are expected to deliver results immediately to boards fearful of missing out in an era of rapid change
• World’s biggest dividend cut as Aramco plans to reduce its dividend payout from $124 billion last year to around $85 billion in 2025. The lower distribution is, however, in line with its previously announced policy and the base payment is maintained
• London isn’t alone in facing IPO challenges, according to the LSE; the problem is global
• Nasdaq confirms 24-hour trading rumours: MarketWatch on discusses some potential challenges
• And finally … investors should be wary of analyst ratings. Some shocking insight from the FT: buy and sell recommendations should be treated with caution

This week’s news

Why British & European companies are building IR capabilities in the US

In an attempt to better engage with global capital markets, many British and European corporates find themselves building IR teams in the US. IR Magazine reports that having a dedicated US-based IR team allows for companies to successfully navigate the nuances of the US capital markets and actively manage activist concerns. Another advantage of increasing visibility there is attracting more US institutional ownership. Following the re-election of Donald Trump and his scepticism towards ESG, social impact strategies can also be tailored with the use of a dedicated IR team across the pond. It is therefore no surprise that large corporates such as Informa, Experian, BAE Systems and GSK have recently expanded their IR to the US.  

CEO tenure declines as boards and investors become less patient

A mindset shift inspired by an era of rapid change has created a ‘CEO culling’ culture amongst the boards of big corporates driven by impatient shareholders. Beth Kowitt at Bloomberg details the risks of executive shuffling amidst an increasing need for speedy results. Dubbing the phenomenon ‘Corporate FOMO’, Kowitt argues that a balance is needed between ensuring the right leader is in place and pushing out CEOs before they have been given adequate time to perform. Despite recent high-profile exits at companies like Starbucks, Boeing and Intel, boards should be wary not to expect an overnight fix for their problems. Perhaps this confidence crisis spells the need for more patience as the former two face the same issues under new Senior Management. An analysis of the Russell 3000 Index by exechange.com found more CEOs were fired or forced out in 2024 than at any point since the firm began tracking the metric in 2017.

World’s biggest dividend cut as Aramco plans to reduce its payout

In a move to relieve stress on its finances, Saudi Aramco plans to reduce its dividend payout to around $85 billion in 2025 compared to $124 billion last year. The move, fully in accordance with the previously stated dividend policy, comes as the company recently has fallen into a net-debt position –  a far cry from when it had over $27 billion in net cash a year ago. Bloomberg reports that the decision itself may also have an impact on Saudi Arabia’s budget, which relies heavily on Aramco’s dividend payouts.

London isn’t alone in facing IPO challenges; the problem is global

David Schwimmer, CEO of the London Stock Exchange Group (LSEG), has argued London’s listing challenges are not unique, highlighting similar weaknesses observed in the US and Asia. Despite London listing volumes falling to a multi-decade low last year, the LSEG chief is optimistic for 2025, saying the pipeline is looking significantly better. Speaking to CNBC, Schwimmer insists the slowing of IPO activity in London is not a unique problem, stating: “We have seen on a global basis, a pretty subdued environment for IPOs, and that’s been in New York, that’s been in Hong Kong.” According to EY, there were just 18 initial public offerings on the London Stock Exchange last year, however Schwimmer is adamant that there is “more capital raised on the London Stock Exchange than the next three European exchanges combined.” Despite a growing number of UK companies recently opting to list in New York, Schwimmer is keen to remind companies that the grass is not always greener.

Money never sleeps & neither will you

We previously shed light on the hypothetical discussion surrounding Wall Street’s plans to trade around-the-clock. Now, there appears to be truth to the rumours as a NASDAQ representative tells MarketWatch that the exchange intends to file with the SEC for approval soon. Nasdaq President Tal Cohen confirmed on LinkedIn that it could soon offer trading 24 hours a day, Monday through Friday, on its main stock exchange. Debates surrounding 24-hours trading have been raised, with a recent Nasdaq survey revealing about half of its listed companies are concerned about maintaining adequate liquidity and handling corporate announcements. Cohen acknowledged that the exchange must address thorny issues related to risk management, trade surveillance and liquidity to ensure success.

And finally… investors should be wary of analyst ratings according to the FT

No need to worry about those sell ratings. Investors should treat analysts’ buy and sell recommendations with caution, warns Adam Parker, the founder and chief executive of Trivariate Research. Writing in the FT, Parker argues that “headline-grabbing stock reports” can often create volatile one-day price movements. But the long-term implications for investors who base their investments off analyst ratings might not be what they expect. In fact, following sell-side analyst advice may lose you money. Trivariate analysed the investable information from analyst ratings, changes in ratings and price targets, concluding that there is little value in these metrics. The stocks rated highly by sell-side analysts have historically underperformed and changes in analyst ratings do not effectively predict subsequent returns. Sell-side analysts, of course, offer insightful original industry research and quantitative analysis that is valuable to investors but Parker would suggest looking beyond the headlines and price targets.