A majority of companies worldwide believe mechanisms such as short-selling, dark pools and high-frequency trading negatively impact global trading markets and that more oversight is necessary, according to an annual survey conducted by BNY Mellon.
74% of firms surveyed seek more regulation on dark pools, short-selling and high-frequency trading. The sentiment is strongest among US companies (89%) versus non-US firms (70%).
The survey also found that companies continue to shift their investor relations strategies to expand outreach to sovereign wealth funds and emerging markets. 59% of surveyed firms meet with SWFs; 40% strategically targeting investors in emerging markets. The percentage of firms meeting with SWFs increased from 47% in 2010, and an additional 25% would consider meeting with them. By a wide margin, the most frequently engaged wealth funds are based in Singapore, Norway and Abu Dhabi. Western European companies are the most likely to meet (69%) or consider meeting (24%) with SWFs, while North American firms are least likely to engage sovereign wealth funds (42%)
Developed as a benchmarking tool for BNY Mellons depositary receipt clients, the survey, Global Trends in Investor Relations was conducted through July and August 2011 and features input from 650 companies across 53 countries. Respondents cover the range of market cap and sectors, including financials, industrials, consumer, technology and healthcare.
Companies are adapting to new global market realities and taking a strategic approach to sovereign wealth, as well as growing investor pools from China to India to Brazil, as they seek to better position their firms in higher-growth regions of the world, said Michael Cole-Fontayn, CEO of BNY Mellons Depositary Receipts (DR) business.
Other key findings of the survey include:
– 40% of companies are actively targeting investors in emerging markets, up from 36% last year. Nearly one-in-five are considering a secondary listing outside their home market. Among these firms, a listing in Hong Kong or China is of strongest interest, followed by Brazil and India. Latin America- (70%) and Asia-Pacific-based (54%) companies report the highest interest in attracting emerging market investors
– 65% of firms issue corporate social responsibility (CSR) reports, up from 50% a year ago. Nearly twice as many firms in North America (54%) and Asia-Pacific (61%) now do CSR reporting compared to 2010, more in line with companies in Western Europe (84%) and Latin America (68%)
– 92% of all companies meet with hedge funds, largely unchanged from 2010; 21% of a firms investor meetings are with hedge funds, down from 24% a year ago
– 85% of companies provide financial guidance, especially those in Western Europe (89%) and North America (92%). 71% of firms in the BRIC countries offer such guidance, compared to 89% of companies in non-BRIC emerging markets
– 20% of companies use social media tools to communicate with investors, up from 9% in 2010, but the majority of IR departments remain wary about tools like Twitter and Facebook
With continued uncertainty in the global markets, it remains critically important for companies to maintain a robust investor relations program and understand how best to focus their efforts, said Guy Gresham, New York head of the Global IR Advisory team in BNY Mellons DR group. Our investor relations specialists work closely with clients in every region to support their strategic IR planning and to help maximize their outreach when targeting new investor communities.
(JDC)