IR Intelligence for Today's Market Volatility

Since COVID-19 has overtaken the news cycle, market sentiment and in many cases our schedules, commutes and offices, the Nasdaq team has had the opportunity to hear from market participants, issuers, etc. around how they are responding to the market’s volatility. We’ve been focused on helping clients engage their investors, understand the markets and ensure they have an effective plan for the months ahead. We hope the below resources and aggregation of insights are helpful in bringing focus to the things that are within your control.

Understand the Markets:

Between January 22^nd and March 10^th, we’ve analyzed fund flows with the following findings:

• The S&P 500 fund has suffered the most outflows in dollar value, while interestingly, the Nasdaq 100 fund has seen decent inflows. Investors are betting on a more concentrated, quality play to endure volatility.
• Utilities have seen some of the largest inflows, as the outperforming sector continues to attract money despite volatility.
• Consumer Staples seems to be attracting money as a doomsday play (toilet paper, diapers, etc.). On the other side of that, the Consumer Discretionary has seen significant outflows.
• Financials have suffered the worst sector losses in both terms of performance and flows, as falling rates weigh on the cyclical banks.
• Shorting the markets and betting on volatility have been the most profitable plays; the former (SH) has seen continuous inflows while the latter (VXX) has already seen major profit taking (especially around 2/26).
• The ESG ETF has seen the largest inflows as a % of AUM since the virus began moving markets on 1/22. This is despite having a similar make-up and performance to broader S&P 500 funds; that said, ESG factors are still a form of risk, and the fund did outperform the SPY, indicating investors favor ESG stocks in risk off market cycles.

Nasdaq’s own, Tamar Essner, has also been actively contributing in the media including a recent interview on  CNBC’s Squawk Alley.

Watch the replay from Thursday’s Trading & Markets Update, featuring Nasdaq’s Chief Economist Phil McIntosh, that will cover a macroeconomic update, market sell-off related to the coronavirus, an update on institutional asset flows and a trading discussion on sector performance, circuit breakers, and Limit Up/Limit Down (LULD).

Keep Current & Prospective Engagement Plans on Track:

With many issuers, investors and banks restricting non-essential travel, it comes as no surprise that we have seen nearly 50 sell-side conferences cancelled, postponed, or moved to virtual.  We are working with clients to find new ways to remain engaged with the investor community and in particular, being more proactive to directly engage investors. Tools like ConnectIR have been helpful to reduce the burden of meeting scheduling and logistics while many issuers and investors have reported extensive use of video conferencing technology, to help replace face to face interaction. We have worked with a number of issuers to restructure investor engagement plans for the balance of 2020. 

Our recent whitepaper about enhancing return on investment from non-deal roadshows is an informative read if you would like to learn more about the evolving buy-side and sell-side landscape including how Nasdaq marries capital markets advisors with Nasdaq proprietary data to help issuers tell their best story.

Messaging COVID-19 Impact to Your Business:

Sentiment, the direction of the indices and gauges of economic health seem to be oscillating by the day. Issuers have an opportunity to ensure their message and guidance are consistent, and that investors are appropriately educated to your business’ resilience during an economic downturn. Nasdaq’s investor perception practice, has heard clearly that investors appreciate an honest account of the durability of the business model through the cycle. And, if it is indeed challenged in certain scenarios, providing transparency into strategic steps to protect the core and unlock new opportunities are critical.

You can’t write a blog in 2020 without mentioning ESG:

Despite the rise of interest and concerns around COVID-19, investors and stakeholders broadly remain focused on ESG. Best-in-class companies we partner with for ESG, see a number of benefits – but at this time, ESG can be a defensive tool. Incorporating ESG factors into the broader corporate narrative, aligned with mission and vision can help investors better understand your strategy, how you will get there and assess risks. As an issuer ourselves, we know what it’s like to walk the walk. As a carbon neutral company and a “best places to work” we take those experiences to serve as a trusted advisor, advocate and provider of software and analytics to issuers globally. For more information, download our ESG Advisory Brochure to learn how our consultative group of subject matter experts help our clients, and the support tiers that the program offers.

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