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The Research Investors Are Counting On

Exane BNP Paribas and UBS emerged as Europe’s top research providers amid the early days of the Covid-19 crisis.

When Covid-19 sent countries into lockdown, the main challenge for brokers was to stay connected — and flexible, according to Theepan Jothilingam, head of research at Exane BNP Paribas.

“We were well-shaped in the people we have, and we had great infrastructure,” he said. “The challenge was to retain the strong relationships in our team while working from home and maintain the exceptional relationships that we’ve had with investors and corporates.”

Five months into the global pandemic, the research head reports that has his team has more than risen to that challenge. “Our analysts have adapted and they have been flexible,” Jothilingam said. 

It helps that Exane BNPP has “really invested in quality,” he added, describing his team as “one of the most experienced bench of sell-side analysts on the street in Europe.” This investment has been validated over the last few years, as the European bank dominated Extel’s rankings of the region’s top brokers.

Now, the Extel survey has been merged with Institutional Investor’s European rankings — and Exane BNPP has retained its position at the top of the pack, tying with for first place with UBS in the 2020 All-Europe Research Team.

For UBS, the first-place result reflects “the hard and diligent work of our analysts through an incredibly volatile time in the market and a difficult time for many,” according to Gareth Jenkins, the firm’s head of EMEA research. Just as Exane BNPP has led the Extel rankings of European research providers, UBS was the top firm in the II survey in each of the last two years.

“We are proud that our teams showed the flexibility and resilience to move seamlessly to working from home and providing clients with the same level of service that they have come to expect from UBS even during this challenging time,” Jenkins said. “Indeed, demand for our analysts’ time has accelerated in 2020 and we have continued to invest in critical areas despite the challenges faced.”

The 2020 All-Europe Research Team was based on the opinions of more than 3,000 portfolio managers and analysts from more than 1,200 institutions investing in Europe’s developed markets. Investors voted for the top overall research providers during a six-week period ending April 17 — as economies were shutting down and markets were at their most volatile. These votes were weighted by how much respondents paid in sell-side commissions.

A separate ranking allowed respondents to vote for the best individual analysts. Exane BNPP topped this one, too, followed by BofA Securities in second and UBS in third.

“When volatility and uncertainty are high, that’s when investors need a top-quality, experienced research team to navigate a landscape that’s been very dynamic almost day-to-day,” Jothilingam said. “Covid was really an opportunity to provide that service that clients want on a day-to-day basis.”

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It’s not just the research analysts that were in high demand: Sales teams have also been “incredibly important to clients in terms of filtering what’s important,” according to Paul Reynolds, Exane BNPP’s head of advisory.

“The time that clients have spent with sales teams is higher than any point in the last year,” he said. The same goes for corporate access professionals.

“Clients wanted greater access to corporates so they could take a real-time pulse on what companies are seeing,” he said. “That in turn required corporate access teams to be very responsive not just in terms of getting a number of clients connected but also changing the business model in the sense that you’re offering a virtual service now.”

Investors seem to have appreciated Exane BNPP’s efforts in both areas: The bank came first in the 2020 All-Europe Sales Team, while taking second place in this year’s ranking of Europe’s Top Corporate Access Providers.

First place in corporate access went to another European firm, Kepler Cheuvreux. The Paris-based bank also came in second after Exane BNPP in the All-Europe Sales Team.

Beyond adapting to remote work, sell-side professionals have also had to keep pace with rapidly changing markets and investor needs.

“Content has been flexed to be responsive to the prevailing market conditions,” Reynolds explained. While clients at first were focused on the immediate impacts of lockdown measures, now he said there is more appetite for research on how things will change over the longer term, including trends that have been accelerated by the pandemic.

After the rapid market recovery earlier this year, Jothilingam said that his team’s macro researchers expect greater volatility in the near term. Looking forward, he said, European investors will be focused on the upcoming U.S. election, as well as Covid-19 case counts and development of treatments and vaccines.

“Our macro strategy team would say, ‘The easy gains are behind us,’” Jothilingam said.

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