The increased use of video conferencing is making life easier for equity analysts, says Singapore-based Nirgunan Tiruchelvam, head of consumer equity research at emerging markets research firm Tellimer.
“Before Covid made platforms like Zoom popular, there was much more legwork involved in getting clients to hear one of my presentations,” says Tiruchelvam. “In the equities field, if we put out a report at 8am advising buying stock in a particular company, we’d have to call about 100 institutional clients by noon asking them to purchase the stock and attend a presentation. But often people wouldn’t be at their desks. We’d call people whose Bloomberg Terminal green light was on, but the hit rate getting through to them was only around 5%. It was pretty inefficient,” he adds.
Until this year not many clients had Zoom installed on their computers, or their company’s security systems would block its ad hoc use in the office, says Tiruchelvam. “Now almost everyone uses Zoom, and people are at their home desks almost all the time. So if we make an 8am buy call, the sales team will send a Zoom invite that I’ll be speaking about it at, say, 2pm. Those who are interested can just accept the invite. We still call people of course, but we find that more and more clients are accepting these Zoom invites,” he says, adding that his competitors also tell him Zoom is becoming a popular tool in the industry.
The pandemic has changed how equity analysts work in other ways. “The typical approach to interacting with clients – analysing company reports and valuations – doesn’t hold so much water in the current situation, because it’s so fluid. Investors aren’t watching company results; they’re watching Covid. They want to know how a business is reacting to Covid – has it made changes to its digital platforms, for example?”
The traditional models that analysts generate have taken a back seat during the pandemic, says Tiruchelvam. “Clients aren’t asking us about the minutiae of profit forecasts or models; they’re more interested in general themes. In my area, it’s about what’s going to happen with consumer behaviour in Asia. In the Asian alcohol sector, for example, will people return to the bars of China and Vietnam or not?”
Mathematical skills are still relevant to the role of an equity researcher, but the focus is on “scenario analysis”. “Making firm forecasts, even for the next quarter, is hard. You could forecast that a restaurant chain will do better in Singapore in October as more people return to the office here, but that goes out the window if there’s a surge in cases. So rather than definitive forecasts, clients want information that will help them weigh up different scenarios. In times of flux, they want us to hold their hands and point out different perspectives.”
Photo by Gabriel Benois on Unsplash
Have a confidential story, tip, or comment you’d like to share? Email: email@example.com or Telegram: @simonmortlock. You can also follow me on LinkedIn.