Following in the footsteps of JPMorgan Chase, who cancelled an investor conference in Shenzen China a few weeks ago due to concerns over the spread of COVID-19, a growing number of investment banks are wrestling with alternative ways to provide buy-side clients access to their conferences and management access meetings.
JPMorgan’s Recent Experience
According to an article published by Bloomberg a few weeks ago, global investment bank JPMorgan Chase cancelled one of its key annual technology conferences scheduled to be held in Shenzen, China as both asset manager clients and corporate executives decided not to attend the gathering due to the rapid spread of COVID-19 in Europe and Asia.
In response, JPMorgan quickly arranged more than 200 virtual meetings in two days between senior executives at Chinese consumer, manufacturing, and technology companies with institutional investor clients leveraging video and telephone conferencing.
Ryan Holsheimer, JPMorgan’s Hong Kong-based head of cash equities and equity distribution for Asia Pacific, explained the rationale for this change saying “We knew we needed to do something different to serve their needs. That includes leading what we see as an increasing short-term trend – a new normal if you like – of virtual client interactions.”
Morgan Stanley is planning to follow a similar format, converting its 10th annual Hong Kong Investor Summit slated to take place on March 24th and 25th into a virtual event instead of taking place at the firm’s offices.
Industry Travel Restrictions Expanding
The growing disruption of sell side research conferences has been prompted by the rapid spread of COVID-19 over the past month, leading a number of investment banks, asset management firms, and corporations to implement travel restrictions or outright bans to limit potential exposure to the virus.
Investment banks including Citigroup, Morgan Stanley, JPMorgan Chase, and Bank of New York Mellon Corp. have all imposed travel restrictions, limiting international travel where the outbreak is most severe, unless approved by top company management.
A number of global asset management firms have also implemented similar travel restrictions in recent days. Capital Group, Wellington Management, Janus Henderson Global Investors, Schroders, and Fidelity International have all adopted various travel limitations in order to prevent coronavirus outbreaks.
One Solution Meeting With Industry Acceptance
According to industry experts, at least five major sell-side conferences scheduled to take place in February were able to avoid outright cancellation by converting their agendas to virtual events, connecting senior company management with investors by leveraging video broadcast technology.
One vendor who has seen rapid take-up of their managed video solution during the recent COVID-19 market disruption has been OpenExchange. During February, OpenExchange successfully connected 1500 professional investors with executive teams from more than 240 companies — many of whom were forced to work from home offices because of restrictions on travel and public gatherings in their home countries. In fact, OpenExchange has seen the number of virtual meetings its hosted surge from 4,000 managed in all of 2019 to over 6,000 meetings in the first three months of 2020.
OpenExchange CEO Mark Loehr commented about the recent surge in its usage, “OpenExchange is uniquely qualified to respond quickly to the urgent need to keep financial communications flowing in the face of the COVID-19 outbreak. The experience and trust we’ve built in serving video needs of the professional investment community over the last ten years, combined with the technology and people we acquired in our recent merger with KnowledgeVision, enabled us to respond rapidly to the urgent needs of some of the world’s most prominent financial institutions.”
Our Take
The number of bank sponsored investor conferences dipped 4% in 2019 from 2018 levels to approximately 3,600 events held across the world, due primary to MiFID II induced cutbacks in conference spending. However, the impact of various travel restrictions implemented industry-wide due to COVID-19 is likely to have an even more severe impact on the number of sell-side conferences held in 2020. Consequently, we expect this expected drop in the number of conferences held should depress sell-side research revenue this year as asset managers attend and pay for fewer conferences and management access meetings.
As we mentioned earlier, one solution starting to gain traction among a few investment banks is converting these conferences into virtual events by enabling buy-side analysts to video conference with select C-level corporate executives versus meeting in person. Unfortunately, the demand for these services is likely to greatly outstrip supply – at least in the short-run while the coronavirus has such wide ranging impact. Based on 2019 activity, investment banks held an average of close to 300 conferences per month.
Of course, the bigger question is how will the industry’s experience with the coronavirus change the long-term behavior of the marketplace? Once this current contagion has passed, will asset managers and corporate executives go back to their old way of doing things, or will everyone realize that attending virtual conferences is a more cost-effective and time efficient way to interact?
Integrity’s suspicion is that virtual conferences are here to stay – though not for everyone nor for every event. Consequently, we suspect that most sell-side firms will need to add video-based corporate access capabilities to their toolbox in order to meet the needs of a growing number of buy-side clients and corporate executives who won’t want to physically participate in these events, but who want to gain the valuable insight provided at them.