Over the past eight years we have witnessed considerable change in the equity research market landscape.
The closure of Barclays and Standard Chartered’s equity businesses can be in part attributed to the economic downturn, the rise of passive investing and the introduction of legislation affecting the structure of sell side equity businesses. To an extent we are still seeing the larger houses streamline their industry teams down from 5-6 people to 2-3 people, as the focus moves away from quantity of coverage to value added products and services.
Traditionally, the natural exit strategy for equity research analysts is to join the buy side. The direct skill set overlap of analysis of public market investments and recommendations has made it a top choice for those looking for the next step in their finance career. However, two options are emerging for those looking to take the next step onto a more stable platform: rating agencies and corporate roles.
Within corporations, writing analysts are moving into CFO and Head of Investor Relations roles. Those who have held lead analyst positions and been within the equity market for 10-15 years are those successful in landing CFO positions. Some moves are made based on experience covering specific companies and building relationships with the management team, but increasingly we are helping make successful introductions. We’ve placed lead internet analysts into Alibaba, TenCent and other emerging companies. Auto analysts have been recruited by major auto manufacturing companies, such as BYD and Geely. Whilst on the consumer side, we have leveraged our relationships in Hong Kong and China to place lead analysts in corporations such as branded sportswear company Anta, for positions located here and on the Mainland.
On the credit ratings side, we have seen the rapid hire of equity analysts with 5-10 year tenures on the sell side, among the ‘Big Three’: Moody’s, Fitch and Standard & Poor’s. As recently as 2010, it was unlikely these houses would consider Equity Research talent, but the market changes have lead to more openness. Given the research, analytical skill and understanding of company valuation required during the rating process, the fit seems natural for those from the sell side.
Lead Analysts in Equity Research interested in discussing the changing market and what opportunities might exist within more stable platforms are welcome to contact me.