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Traditional Financial Centers Lose Some Shine As Investor Sources - BNY Mellon Study

Tom Burroughes, Group Editor , November 22, 2017

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A study of investor relations professionals by the US banking and financial services group examines shifting attitudes and data, including the position of women in the industry.

Traditional hotspots for new or increased investments lost some of their glow this year, suggesting new sources of money need to be tapped, according to a survey of attitudes of investor relations professionals issued by BNY Mellon.  

The firm, in its 2017 Global Trends in Investor Relations report, issued two years after its previous study in 2015, finds that there has been an overall drop in focus on the top five traditional global financial centers, as leading sources for new or increased investment in the next five years.

While the US continues to be perceived by most respondents as a source for investment opportunities, cited by 80 per cent in 2017, this fell from 91 per cent in 2015. Over the same period, the number two-ranked UK declined to 58 per cent from 76 per cent, followed by China at 26 per cent, which declined from 50 per cent in 2015, Singapore at 26 per cent, down from 44 per cent, and Hong Kong at 24 per cent, down from 37 per cent in 2015, respectively.

Geopolitical risk remains the predominant issue affecting overall global market confidence, according to the professionals responding to its survey.  Companies report they are depending less upon the sell-side for key types of investor outreach, with the majority of companies now prioritizing the ability to pick their own target investors as a defining factor for their roadshows.

"IR professionals are responding to critical market developments such as the growth of passive investment and the headwinds affecting the global brokerage community by taking on more responsibility for market engagement themselves," Christopher Kearns, chief executive of BNY Mellon's Depositary Receipts business, said. "These developments stem from, among other things, regulatory reforms resulting from MiFID II, new global stewardship codes and the realities of the current market environment, which are in turn placing considerable new demands on investor relations teams globally." (MiFID II is the European Union directive requiring firms to disclose more on fees and processes to clients, and comes into effect in January, 2018.)

The report examines the role of the IR professional. It notes that the shift towards more “passive” or index-tracking styles of investment in the asset management sector, will be the top influence on how investor relations functions in the next 10 years.

Among other findings, the report found that 29 per cent of IR officers were women; female IROs earn almost a third – 31 per cent – less than their male counterparts, with the gap largest in emerging markets.

With environmental, social and governance issues rising in importance for investors, 32 per cent of IROs said they had communicated with investors on ESG issues. 




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