Last week, IHS Markit hosted an Investor Relations Upskilling event in Tokyo, bringing IR practitioners from listed issuers together with industry leaders from buy-side and sell-side firms to discuss the current landscape of Investor Relations. We invited leading experts from each market sectors and took an in-depth look at the latest market trends and regulatory changes along with best practices for investor relations in Japan.
The changing dynamics of the sell-side
Hiroki Tanaka from Mizuho Securities provided insights into what challenges the sell-side is facing, in particular with the impact of MiFID II on arranging roadshows for Japanese companies. The goal for investor relations professionals is to figure out a way to deliver as much relevant information as possible in a timely manner to the targeted buy-side investors. With MiFID II impacting brokers and the dynamics of relationships between issuers and investors, IR practitioners are now standing at the crossroads of significant changes in the offering of financial data. Issuers engaging investors directly is going to increasingly be the norm and IR professionals will be tasked with handling this effectively and efficiently. Using multiple channels for information to support this will be critical for success.
ESG is the new sexy
ESG has been, without a doubt, the hottest acronym amongst market participants for the past few years though very few of us are sure what it really means to become more ‘ESG conscious.’ During the panel discussions with sell-side, buy-side, and issuer, there was a consensus that Japanese companies need to consider ESG with changing practices. Many Japanese issuers have mainly focused on reforming their governance, while giving little attention to environmental and social aspects of ESG. Advocating efforts to improve ESG factors to enhance corporate value is a rare occurrence but demonstrating interest and value in ESG at issuer-led events and meetings has the power to appeal to potential investors.
Best practices for effective IR
Yoshiki Nagata from Meiji Yasuda Asset Management shared an interesting look into the mind of the buy-side. Institutional investors are driven by various kinds of goals and constrained to a delegated portfolio management style. From the long-only, long-short, small-cap/large cap; each different mandate requiring different approaches. This means IR practitioners must carefully decide on whom to talk to and what to talk about. Additionally, institutional investors are putting more and more pressure on engaging in dialogue with C-suite level executives. It has become one of the key roles for IR practitioners to encourage communications between investors and company leadership, leading to stronger relationships.
This fast-changing world demands Investor Relations practitioners to handle a wide range of information and proactively make changes. If you are interested in finding out more about the discussions, please get in touch with Hidekatsu Yamamoto.