‘Markets are chaotic, no longer random’: exploring market dynamics on IR Copy Assume Tank – Europe 2024

As an IRO, when you are looking to understand what impacts your percentage payout, you will want to understand which ‘bucket’ your corporate falls into. This was the message of a panel that promised to uncover the secrets and techniques of trading dynamics of your stocks – and offer methods for good luck – as part of the IR Copy Theory Tank – Europe, Thursday, June 20. in London, an invitation-only tournament for senior IR officers.

Lauren MacDonald, conference producer at IR Copy, was joined by Gabriel Gonzalez-Gutierrez, investor family member and ESG supervisor at Rolls-Royce – an engineer who came to the program from a background in engine design. Nedy Yahya, senior money dealer at Corporate – and USA Storehouse, who noted how his position comes with ‘learning a little bit about everything’, including market dynamics and what drives market movements .

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Sometimes, there are sunlit drivers behind share-price momentum. However, even if that’s not the case, Gonzalez-Gutierrez said there’s always a reason. ‘Markets are not random, they are chaotic,’ he said, adding that there is always a perception process on the part of the investor and, for IR, the question is ultimately ‘to intervene, to change (your) message’ or some of that message. Strengthen the parts’.

This is a typical problem in an organization like Rolls-Royce, where the company extends into other sectors, he said: ‘Three quarters of the revenue (at Rolls-Royce) comes from aerospace and defence, but a quarter comes from industries like – And their dynamics are completely different.

One backup problem, Yahya said, is the quick option that has taken over financial markets over the past 20 years. With hindsight, he said it seemed that the percentage moves were more ‘simple’. ‘If there is excellent information, they make progress,’ he explained. ‘If it’s malicious information, they become unhealthy. If there is good information in the financial system, everything will progress.’

On the other hand, these days, IROs have to deal with algorithmic buying and selling, dim swimming pools, and more. ‘Now, stocks are put into different factors and buckets and, from an IR perspective, it’s really remarkable to understand where your corporate sits in those buckets and those elements,’ Yahya said.

And sometimes, it may seem as if nothing significant has happened, he said: ‘You can look at the market during the day and see the FTSE and Euro stocks unchanged – it feels like that generation. Nothing has happened. Below, however, there may have been significant rotation. There would have been extreme decline and, on the trading floor, we would probably have referred to it as a crazy generation. for someone not anymore At ground level, you would have no idea that anything more dramatic had happened.’

It’s all about which category you are in, he added: ‘You have factors like speed, quality growth, whether you are an AI winner or an AI loser, whether you are in the shortest category or the tallest.’

Information Rabbit Hollow

When asked how IROs can take the lead, observe and analyze the abundant data in the market, Yahya warned against ‘going down the rabbit hole of wanting to know everything that is going on’ – partly because Because buyers don’t need you to understand the whole thing. ‘The reality is that as markets have become more sophisticated, investors have become more sophisticated in their trading style (and) everything has become a little less clear cut and less visible,’ he said.

On the other hand, there are signals and methods that the IRO can use to protect the fog from sunlight. Yahya and Gonzalez-Gutierrez confirm that ‘in the age of AI and algorithms’ it is personal relationships that become more noteworthy – for example, when you’re looking to better understand your percentage sign or develop relationships. Taking advantage of merchant relationships can help you in the long run by gaining knowledge from stock-loan groups.

“We have to be a little more creative in trying to figure out where people are and what they are doing,” Yahya said. ‘A big part of that is talking to people.’ He also pointed to Bloomberg’s benefits from ‘high’ or ‘low’ exposure to an industry in the future – which will dictate how much clarity you tie to it – as well as how consensus estimates will change, for example. Have been.

Gonzalez-Gutierrez said that for IROs, this data is not just about knowledge as an internal tool. ‘Bloomberg also gives you access to the information that (other) people are using, which funds are using – so you can check your data,’ he said, defining the ESG use case. ‘Certain ESG factors are important for certain funds to be able to own you, and if you don’t (expose that data), they won’t be able to (buy) your inventory. (Then) you want to make sure that whatever knowledge is available is of the right kind.’

After talking about the impact of retail shareholders and how employees are getting access to the market through ETFs – which bring their own challenging situations – the conversation moved back to stock baskets and a grouping into an index. How admission may affect your listing.

While these types of factors are noteworthy, IROs are urged to remember this when instability may be on the horizon, with Yahya also noting how easily things can change.

“It is very important to understand the dynamics and themes of the week or month,” he said. ‘A month ago, the market was most worried about inflation rates remaining high for a prolonged period. Now it fears some potential sun-baked touchdown regarding worldwide elections and political skepticism. Every year it is a special affair and you are also given to guess how your corporate fits into that theme.’