IR Monitor – 17 April 2024

In this week’s newsletter:

In this week’s newsletter:

• Broker scents promising change in sentiment towards flotations: Peel Hunt’s ‘IPO Speedometer’ suggests investors are eyeing new listings – The Times
• Absentee investors to blame for City’s Punch-and-Judy show over pay – Oliver Shah
• Should you publicly admit you use AI in Investor Relations? asks IR Magazine. IR Officers are divided but leaning toward public admission
• And finally … a surprising tip for CEOs who want to raise their stock price: be kind

This week’s news

Broker scents promising change in sentiment towards flotations

Peel Hunt have suggested that there are signs of improvement in London’s IPO market. Suggesting a stable Labour government with a decent majority could further encourage international investors to list in London, the broker has launched an “IPO Speedometer” based on a mixture of 30 qualitative and quantitative data points. Peel Hunt note that there have been positive trends recently with the rise of IPOs in Europe which could be a good lead indicator for the British market. In their research, Peel Hunt use AI to score sentiment based on qualitative feedback received from conversations with investors. Charles Hall, head of research at Peel Hunt, said there were promising early signs of investors’ demand for IPOs. He also said the new Speedometer, set to be published every two months, would help prospective IPO candidates to time their flotations better. 

Absentee investors to blame for City’s Punch-and-Judy show over pay 

In contrast to their usual role, proxy advisors have recently been in the spotlight themselves and have received negative press from the likes of Elon Musk and Jamie Dimon. This annual meeting season is set to be crucial with regards to the topic of corporate pay. As tensions rise amongst FTSE 100 companies, recent question marks over London’s influence as a global market have likely been a catalyst for this negative outlook towards proxy advisors, writes Shah. Citing the recent pay rises of AstraZeneca’s CEO and Refinitv’s MD, Shah believes these pay rises deserved to be approved but also believes there are plenty of PLC chief executives who don’t need a pay rise. He suggests that “one-size-fits-all” solutions are holding back the biggest PLCs and that, ultimately, the cause of “this annual Punch-and-Judy show” over pay is a lack of engagement amongst investors who outsource voting decisions on key things like corporate pay to the proxies. 

Plans to axe MiFID II rules said to have hurt investment research

Under new laws proposed by City regulators, plans are being drawn up to roll back MiFID rules which critics argue have fuelled a decline in investment research on London-listed companies and, ultimately, have harmed the British stock market. The plan partially reverses a crackdown imposed by Brussels in 2018, when Britain was still part of the European Union. Critics have argued that the EU rules have contributed to a reduction in both the volume and quality of research on smaller listed companies and a reduction in the liquidity of their shares. The regulator and the government are now exploring various strategies to make the London market more attractive. This includes revising the regulations on investment research to rejuvenate Britain’s capital markets amid concerns about the City losing business to overseas jurisdictions and notably to Wall Street.

Should you publicly admit you use AI?

The adoption of artificial intelligence in IR has become a subject of debate among professionals. While some fully support embracing the power of AI to enhance communications & efficiency not everyone shares this sentiment, as discussions at the IR Magazine Forum – AI for IR – revealed. The debate has brought forth various perspectives, with some emphasising the importance of transparency and responsible AI use, while others highlight the need for human oversight and accountability. As the conversation around AI in IR continues to evolve, it underscores the imperative for industry stakeholders to navigate the path forward with careful consideration and a commitment to balancing innovation with integrity.

And finally … a surprise tip for CEOs who want to raise their stock price: be kind

In the world of Chief Executive Officers, it seems that being nice isn’t just good for the soul—it’s also good for the stock price. A recent study of conference calls has revealed that when CEOs authentically express concern and solidarity with stakeholders during challenging times, such as the COVID-19 pandemic, their companies experience increased stock price performance and reduced volatility. This phenomenon underscores the importance of implicit motives and effective crisis communication in shaping investor perceptions. While critics may dismiss such displays of empathy as “cheap talk,” the study suggests otherwise: it suggests that it pays off for CEOs to go beyond mere financial information and show some humanity.

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