By Michael Roper
Last week I attended DIRK 2019 in Frankfurt, Germany, and caught up on the latest trends, insights and best practices in European investor relations. As the leading IR conference in Central Europe, DIRK is a great opportunity for networking and gaining valuable insights through educational workshops. We have previously attended under the Ipreo brand, but this was our first time as IHS Markit, introducing our new branding and showcasing our new product and service offerings for the Investor Relations community. As IHS Markit, we actively participated in discussions throughout the event, and presented our insights at the two sessions below:
- Ownership Structure of German DAX 30
The first was a presentation on the ownership structure of the German DAX 30 by Frederick Frank, Associate Director – Research & Analysis. Frederick focused on several topics including shareholder structure by region and style, top buyers and sellers across the index, voting behaviour and ESG sensitivity of the top investors in the market.
- Macroeconomic Prospects and the Impact for IR in the Region
In the second session, two of our in-house experts hosted a well-attended session on the opportunities and challenges facing Germany and Europe. Timo Klein, Principal Economist – Economics & Country Risk, gave a fantastic overview of the macroeconomic prospects for the region, highlighting implications for interest rates and capital markets as key risks to baseline assumptions. Then, Ari Davies, Global Head of Corporate Analytics, tied it all together by giving practical advice on how issuers can respond to these trends and implement best practices in their programs.
One topic which was front and centre at DIRK was ESG. Based on feedback from our North American counterparts, this was also THE hot topic at both NIRI in the US and CIRI in Canada. We’ve done quite a bit of research on ESG, as our clients are always asking about it. The discussion at DIRK was broad and focused on these areas:
- ESG impact on investing to the UK Corporate Broking model (how it works, what it incorporates and whether it can be replicated and translated into the European market)
- Shareholder structure by region and style
- Top buyers and sellers across the index
- Voting behaviour and ESG sensitivity of top investors in the market
In addition to the highlights above, additional key takeaways on trends discussed at DIRK 2019 follow:
Investor Relations Trends
- ESG is increasingly evident in the thesis of many investment managers with mandates increasingly awarded following scrutinization of good practice.
- The adoption of MiFID II regulations in Europe in January 2018 had a paradigm-shifting impact on the practice of investment research and corporate access, though some of these effects are very much dependent on the size of the issuer or firm in question.
- Broker-led Corporate Access still accounts for much of the contact, however, direct engagement from the buyside is increasing with an ever-growing number of institutions forming their own inhouse corporate access teams.
- European issuers anticipate and are continuing to plan for the increase in direct access from the buyside and are hiring appropriately.
- Many firms are starting to adopt a hybrid approach to investor engagement with IROs looking to utilize a combination of a broker-led access coupled with direct investor interaction in order to produce the optimal investor relations programme.
European and Global Macro Trends
- Global growth is slowing everywhere; while manufacturing sectors struggle, services sectors are mostly holding strong.
- Risks to growth are becoming increasingly evident, including the escalation of the US-China trade war, escalations of hostilities in the Persian Gulf and the potential disruptions following a no-deal Brexit.
- In Europe, the risk of an economy-wide recession stems from ongoing political and policy risks, as well as persistent weakness in the banking sector. While there is evidence of weak growth, a recession is not the most likely outcome.
IR teams in Europe are facing many of the same challenges as our clients around the globe. At the same time, the challenges of MiFID II are having a bigger impact on these teams. Check out our advice for navigating the landscape for investors and the impact MiFID II is having on our clients around the world in Investor Relations in a “DIY” World.