Revealing ESG Opportunities and Three Major Changes in Investor Relations

HONG KONG, June 15, 2023 /PRNewswire/ -- Futu Holdings Limited (Nasdaq: FUTU) ("Futu" or the "Company"), Hong Kong Investor Relations Association (HKIRA) and CECEP Environmental Consulting Group (CECEPEC), jointly released the "2023 Investor Relations Research Report - ESG, New Business Cycle & Outstanding IR Practice Research"("The Report").

Against the backdrop of market upheaval around the world, the impact of the pandemic, interest rate hikes, and inflation have contributed to more intense volatility and a shorter duration of a new business cycle, according to the Report. The investor relations ("IR") business model is undergoing three key changes as a result of investors' increasing demands for real-time, analytical, and interactive content from publicly traded firms. The Report also highlighted that more than 60% of IR personnel of listed companies are uninformed about the incentive programs and regulations related to environmental, social, and corporate governance ("ESG") management and disclosure. However, two-thirds of them agreed on the positive impact of ESG on the company's stock price and market value.

This is an industry report focused on ESG and new cycle IR practices, providing readers with in-depth insights based on the traffic and trading data of more than 800 Hong Kong-listed companies on Futu's platform, as well as survey responses from 1,100 investors and 77 Hong Kong-listed companies.

Lack of ESG Knowledge Becomes Main Obstacle to Nearly Half of IR Personnel

Local regulatory organizations are taking efforts to enhance associated regulations as ESG investment has gained market traction in recent years. According to a survey of 77 IR professionals from listed companies, nearly 80% of them only communicate with investors about ESG matters to meet the basic compliance requirement on content disclosure; 45% of them pointed out that the primary challenge for carrying out ESG work is a lack of ESG knowledge. However, more than 60% of them agree that implementing ESG-related activity will be beneficial to businesses' long-term development. They also show higher intention to advance ESG as senior management put greater emphasis on it and favorable impact is posed on stock prices and market value.

Joy Song, General Manager of CECEPEC, emphasized the important role of IR practitioners in bridging the gap between companies and investors. They serve as a connector throughout the process from creating ESG reports, developing ESG strategies, to promoting positive interactions between companies and investors. The report also provides suggestions for IR departments to carry out dedicated ESG affairs. For example, IR professionals should deliver corporate ESG stories in a timely and targeted manner, bringing stakeholders to resonate with corporate value, participating in ESG ratings, identifying potential green or sustainable assets, and exploring opportunities for sustainability-linked financing.

Volatility of New Business Cycle Calls for Greater Agility in IR Management

Global financial markets are experiencing turbulence as the pandemic persists, inflation rises, and the Federal Reserve continues to raise interest rates. The volatile market environment, as well as the exceptionally quick market rhythms, suggest that the current business cycle will be considerably more intense and shorter. The Report states that the scale effect of information on the investment market is intensifying. IR practitioners need to adjust IR strategy constantly to keep up with the changing market.

Haylie Huang, Executive Director of Futu I&E, said, "The challenge for listed companies in the new business cycle will be their ability to promptly adapt to changing markets, gain investor insight, and continuously improve the IR strategies and operating models. Digitalized IR communication can speed up the delivery of important information, broaden communication channels, and foster long-term investor trust."

Investors Value Real-time, Analytical and Interactive Information

Futu I&E conducted a survey of over 1,100 investors and analyzed investors' social media usage and trading behaviors on Futu's platform to better understand the decision-making process of investors in the new business cycle.

When a company's stock price falls, investors believe that disclosure information such as the company's core strengths, technological barriers, industry position (58%) and future strategic planning (49%) can drive investment confidence better than information such as shareholder buybacks, brokerage research reports, and executive changes, indicating that investors are more concerned about the company's fundamentals during market downturns.

The survey demonstrated that investors prefer to obtain real-time, analytical, and interactive information when learning more about listed firms.  Live streaming of financial statements release (28%) remains the most popular online content due to the close correlation between financial statements with getting to know about the company's development. The content of fund managers, analysts, KOL interpretation (24%) ranked second, enabling a better and in-depth understanding about a company's business and market trends. Among the top 100 comment contents posted by corporate accounts, content of rewarded interactions (30%), including Q&A, voting and lucky draw events, had the highest user engagement. These activities stimulate users' interest and curiosity resulting in a higher level of trust in and loyalty to the corporate account. These activities also help businesses to learn user opinions and feedback, providing directions for improving content and interaction for corporate accounts.

Three Key Changes in IR Business Model to Embrace the New Business Cycle

The Report suggests that IR departments in listed companies need to change rapidly both internally and externally in response to the new business cycle.

First, daily IR communications has moved online with the post-COVID new dynamics, enticing an increasing number of individual investors to participate in the capital market leading to improved stock liquidity. With the rising participation of individual investors, IR must shift away from sole traditional communication channels such as websites, conference calls, and offline meetings and toward a more efficient communication model including through interactive trading platforms, Futu Page accounts, executive interviews, private roadshows, quarterly strategy meetings, and daily live streaming. Last but not least, the IR department is required to think holistically and serve as an information hub for online and offline communication scenarios in order to effectively and coherently distribute information.

Dr. Eva Chan, Chairman of Hong Kong Investor Relations Association, highlighted that digitalization in the IR industry means more than an alternative communication method. It is more about big data analysis and information integration. The dissemination of information is merely the first stage of IR work. Furthermore, it is essential to set up a two-way communication mechanism where investors' feedback can be heard and suggestions can be offered based on a thorough data-based analysis. Industry innovation and the spread of public opinion have both occurred at breakneck speed in the new business cycle. In order to optimize IR work efficiency and effectiveness, IR professionals should leverage on new technology and data to better understand capital market trends, industry competitor dynamics, market's real-time response.

About FUTU I&E

Futu (Nasdaq: FUTU) is a leading digital fintech company. Futu provides services to more than 200 countries and regions and about 20 million users worldwide. FUTU I&E is the corporate and institutional service brand under Futu Group, including 5 core services: employee stock ownership plans (ESOP), IPO promotion & distribution# and international placement services#, IR & PR services, block trade & stock reduction/repurchase #, and institutional trading services#. By Q1 2023, FUTU I&E has provided IPO distribution and IR services to more than 353 companies and more than 1,500 companies, financial institutions and financial media are already on Futu Page.
*Services provided by licensed subsidiaries of Futu Group

About Hong Kong Investor Relations Association

Hong Kong Investor Relations Association (HKIRA) was established in December 2008. It is a non-profit professional association comprising investor relations practitioners and corporate officers responsible for communication between corporate management and the investment community. To date, HKIRA has about 1,300 members most of whom are working for companies primarily listed on the Stock Exchange of Hong Kong. About 60% of the Hang Seng Index Constituent Stock companies are currently members of HKIRA. The total market capitalization of member companies exceeds HKD 2.4 trillion, encompassing diverse industries such as real estate, retail, telecommunications, resources etc.

About CECEP Environmental Consulting Group Limited

CECEP Environmental Consulting Group Limited ("CECEPEC") is a professional sustainability consulting company established by China Energy Conservation and Environmental Protection Group, headquartered in Hong Kong with branch offices in Beijing, Shenzhen and Shanghai. CECEPEC continuously acts as a think tank to government bodies, regulators, and provides professional advisory services to various international organizations and enterprises in the Greater China region.

Source: Futu Holdings Limited Related Stocks: NASDAQ:FUTU