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China and Germany pump as perceived sources of investment capital, says BNY Mellon survey

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After the United States and the United Kingdom, China and Germany are now rated by companies as the most strategic sources of new investment capital over the next five years, reflecting those countries’ growing economic clout.

That’s according to BNY Mellon’s annual investor relations survey which reveals that China has moved up from fifth to third place, while Germany surged from seventh to fourth place, overtaking Singapore and Japan.
 
Companies also continue to increase their outreach to sovereign wealth funds (SWFs), with 65 per cent of respondents engaging with SWFs over the past year, up from 57 per cent in 2013.
 
Systemic market and political risk remain companies’ top two concerns impacting global market confidence. Uncertainty over new regulatory environments dropped in importance from the previous survey, falling from third most important to fifth this year.
 
Developed as a benchmarking tool for BNY Mellon’s depositary receipts (DR) clients, the survey, Global Trends in Investor Relations, looks at how publicly traded companies are managing their IR practices and the issues that affect them. Now in its tenth edition, the 2015 report is based on results from 550 respondents across 54 countries that span the range of market cap and industry sectors, including financials, industrials, consumer, technology and healthcare.
 
“Global firms continue to expand and enhance their engagement with current shareholders, but we’ve seen an interesting shift,” says Christopher M Kearns, CEO of BNY Mellon’s Depositary Receipts business. “Responses indicate that after a post-crisis period focused almost solely on investors amid intense competition for capital, companies now are devoting more time to other IR activities, such as board member involvement, enhancing senior managers’ visibility, and improving relationships with analysts.”
 
Other key findings of the survey include: The percentage of company board members meeting with investors doubled, rising from 24 per cent in the 2013 survey to 49 per cent in 2015. Respondents also report that senior managers are increasingly part of those meetings, with 55 per cent saying senior execs are involved, compared to just 43 per cent in 2013.
 
The five most strategically important countries in the next five years for new sources of investment capital are the US (91 per cent), the UK (76 per cent), China (50 per cent), Germany (45 per cent), and Singapore (44 per cent). Japan fell from fourth to sixth place between the 2013 and 2015 surveys.
 
The upward trend in outreach to sovereign wealth funds continues, with 65 per cent of participants reporting engagement with SWFs during the past 12 months, up from 57 per cent in 2013. Norges Bank Investment Management (42 per cent), Government of Singapore Investment Corporation (38 per cent), and Abu Dhabi Investment Authority (30 per cent) remain the top three SWFs engaged with by global companies.
 
IROs conduct 40 per cent more one-on-one investor meetings when their performance is linked to their pay, companies reported.
 
Thirty-percent of companies reported reaching out to socially responsible/ESG investors, up from 26 per cent in 2013. Those that do cite primary reasons are to target long-term investors and to diversify their shareholder base.
 
Since 2010, survey results have shown a continuous decline in outreach to retail investors by CEOs, CFOs and IROs. Data suggests that, given time constraints, companies increasingly focus on institutional investors as a more efficient use of their resources.
 
Only 30 per cent of companies use social media to engage investors. Eastern European firms are most active with 53 per cent using social media, while North America is the least active region with only 24 per cent involved. More than twice as many mega-cap companies (54 per cent) use social media in IR compared to micro-cap firms (26 per cent).
 
“Global issuers recognise the importance of maintaining an active, engaged investor relations program,” says Guy Gresham, head of the Global IR Advisory team in BNY Mellon’s DR group. “In developing this survey, we’ve focused on helping companies identify best practices in investor relations by providing actionable benchmarks. Whether it’s meeting the evolving needs of long-term stakeholders or enhancing disclosure, new opportunities are always emerging for global firms to demonstrate leadership.”

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