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The Future of Emerging Market Research, According to the Top EMEA Research Firms

Leaders of II’s Emerging EMEA Research Team share how they’ve adapted during the Covid-19 pandemic – and why their client relationships are stronger than ever.

The future of equity research in emerging markets is hybrid — according to the EMEA region’s top brokers.

After a year and a half of supporting investors virtually in the developing markets of Eastern Europe, Russia, the Middle East, and South Africa, equity research providers are starting to transition their analysts — and client relationships — back to the office as volatility in the region continues.

“The hybrid strategy for client interactions will continue to be a necessity,” according to Sophie Warrick, head of EMEA Equity Research at JPMorgan Chase & Co. 

“It has been really pleasing to see the level of virtual connectivity with clients in different regions, which have exceeded the level which took place historically via physical marketing,” she said. “In this sense Covid-19 brought us closer to our clients; adding back in-person interactions is something we are all looking forward to, but the space between physical trips will be filled with more client engagement than before.”

Clients clearly felt the same way: They once again voted JPMorgan the No. 1 firm in Institutional Investor’s 2021 Emerging EMEA Research Team, in which investors rank the top research teams covering the developing markets of Europe, the Middle East, and Africa. Responses were weighted by how much each voter spent on research commissions.

HSBC followed in second in this year’s ranking, with BofA Securities placing third, based on the opinions of 991 portfolio managers and analysts with significant emerging EMEA securities holdings. UBS and Morgan Stanley took fourth and fifth, respectively. 

Like JPMorgan, BofA Securities — which was also a top-rung provider in II’s 2021 All-Europe Research Team — has also been transitioning its team back to the office.

“It’s going to be interesting,” said Eric Lopez, managing director of BofA Merrill Lynch Global Research. “In reality we’ve allocated more time writing and thinking, and I’ve been impressed with the quality of content and events over the last 18 months, which is a function of the remote environment.”

Lopez is eager for in-person interactions among his team — especially the junior members — to resume. But things like travel won’t resume immediately and will be on a client-by-client basis. “The rules of engagement will probably change,” he said. “Some clients will want to see corporates physically and some CEOs may never go back. I am in the middle of clients and corporates.” 

JPMorgan’s Warrick, who took on her new role in March of this year, is currently working three days per week in the office herself, but given the bank’s wide network, reported that there are a variety of models in place based on local guidelines. “Our advisory franchise as a whole was set up very early on in the pandemic to deliver ‘business as usual’ to our clients — published content, interactions, corporate access, and conferences all quickly established a robust home-working equivalent [and] interactions increased across the board,” she said. “We are progressively shifting teams where possible to a phased office return, observing local regulations, focusing on safety, and respecting personal and unique conditions.”

Warrick believes the “new normal” of a hybrid approach will enable both a return to the office and the option to work from home. “We firmly believe that working together in person is important for our culture, clients, businesses and teams, and that much of what we do best is enabled through connections we make and conversations we have when we are in the office together,” she added.

Warrick reported that JPMorgan is investing and expanding its research team in EMEA, adding analysts and committing to developing on the-ground insights with a physical presence in Moscow, Dubai, Johannesburg, and London.  

But one large obstacle has been the slower vaccine roll out in emerging EMEA versus its developed market counterparts. The pace of vaccine distribution “is an important factor for economic recovery in the region,” Warrick said. “The volatility surrounding that trajectory is something our clients continue to have to navigate; we spend a lot of time combining insights across multiple verticals in order to deliver the content to assess this in a timely and forward looking way.” 

Covid-19 isn’t the only client concern JPMorgan and its peers are addressing.

“Clients have a growing focus on ESG, specifically around climate but across all three pillars,” Warrick said. “We are investing in our ESG capabilities, both with a standalone team but, critically, also the culture and framework for that team to work collaboratively with our regional and sector analysts. The sector and regional context is essential to assess ESG issues in a forward looking manner, and therefore important for our client delivery.”

Likewise, Lopez said BofA “developed a better thematic core offering, and now ESG.”

“We constantly try to adapt,” he added.

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