Emerging market analysts are used to unpredictability. But 2020 has been something else entirely.
As Covid-19 began to spread around the world, forcing countries into lockdown and sending entire workforces home, top brokers observed a sudden increase in demand from investors for research, corporate access — for everything, according to Camille Asmar, HSBC’s head of emerging market equity sales for Europe, the Middle East, and Africa.
“At the beginning, clients wanted access to everything and wanted to know everything,” he said. “We were here to support them and guide them throughout the pandemic and volatile markets.”
For investors in the developing markets of Eastern Europe, Russia, the Middle East, and South Africa, HSBC was particularly well suited to guide them, having long focused primarily on emerging markets. On the research team, for example, every analyst has more than 15 years of experience covering predominantly emerging markets, according to Raj Sinha, head of research for Central and Eastern Europe, the Middle East, Africa and Latin America.
“In emerging markets we are used to volatile moves and waves, so for us as a combined team — sales, research, and corporate access, which have worked together for over a decade — we were used to navigating situations such as this one,” Asmar said. “We were in a position stronger than anyone else to be there for our clients.”
The clients seem to agree: HSBC was among the top-performing firms in Institutional Investor’s Emerging EMEA survey, which asked investors to rate the region’s research purveyors, sales teams, and corporate access providers. The London-based bank was joined in the top rungs by global firms like JPMorgan Chase & Co., Bank of America Corp. and UBS Group.
“While Covid-19 has been a challenge for economies and people’s well-being, we have seen increased demand for high-quality research and differentiated corporate access,” said Sunil Garg, head of international equity research at JPMorgan. “This is also reflected in very strong take-up, with a substantial year-to-year increase for quality content, engagement with our analysts, and participation in our flagship conferences, despite the challenges posed by purely virtual formats.”
From a firm-wide research perspective, JPMorgan took first place in the 2020 Emerging EMEA Research Team, followed by BofA Securities in second place and HSBC in third.
When investors voted for the best individual analysts, however, HSBC came in first, followed by UBS in second and BofA in third.
HSBC also took the crown in the 2020 Emerging EMEA Sales Team, wherein respondents ranked the firms with the best generalist salespeople. BofA placed second in this ranking, while JPMorgan ranked third.
Finally, Emerging EMEA’s Top Corporate Access Provider went to HSBC. Emerging markets specialist Renaissance Capital ranked second in corporate access, followed by BofA in third.
The results were determined by 922 portfolio managers and analysts who were polled over a six-week period ending April 17 — capturing client sentiment during the Covid-19 crash and rapid recovery.
“Helping our clients navigate through unprecedented markets has been a top priority,” Garg said, adding that JPMorgan remains “long-term bullish” on emerging markets in spite of the pandemic.
The extreme volatility in the markets has been matched by the ever-changing demands of investors, whose needs have shifted and evolved alongside their portfolios.
“Clients want different things at different stages,” explained Sinha of HSBC. “At some point they would like to speak to the analysts, then it’s corporate access, then they want experts, then they look for something completely different — and then they’re back with analysts. At each point, you’re having to adapt to what the client wants.”
This includes adapting to the pandemic’s new normal of remote work. HSBC’s corporate access teams, for example, launched what they call virtual trips: “Making sure the investor has the same experience as a physical trip, being accompanied by a sales or research colleague,” Asmar explained. “We gave them four to five meetings per day and they had the opportunity to listen in on calls if they wanted with replay options and a bespoke service” that included one-on-one meetings and group events.
These virtual trips, according to Asmar, have worked “extremely well,” with hundreds of investors participating in online events focused on Russia, the Middle East, South Africa, and Turkey. Still, he believes that the nature of emerging markets — unpredictable and volatile as they are — continues to be more suited to in-person, on-the-ground research.
“As soon as the Covid-19 crisis shows some sign of slowing down, I would not discount that all the emerging market investors would want to not only see us again physically but also go back to the regions physically, travel, and meet companies,” Asmar said. “I am confident that we will see investors go back to the old-fashioned way of doing business.”