While financial history often repeats itself, the global markets of 2023 were distinctive in their idiosyncrasies, according to top global research providers.
“The complexion of the markets changed many times, interconnectedness was high but also varied, and the impact of various market drivers was not always consistent with history,” according to Hussein Malik, co-head of global research at J.P. Morgan Chase. Sell-side research firms needed to be “both nimble and complete” in their offerings, he added.
“Every year is unique in equity markets and so was 2023,” said Marko Kolanovic, chief global markets strategist and co-head of global research at J.P. Morgan. Investor sentiment toward stocks hit highs and lows: from despair due to March’s regional banking crisis to exuberance about AI and tech. Then stock prices experienced a late summer selloff, which was more than reversed in a sharp end-of-the-year rally on hopes of early interest rate cuts. Despite the uncertainty, equity markets were not volatile, with positive sentiment toward stocks most of the year, he added.
In the fixed-income markets, rate expectations were a key driver but manifested themselves in different ways across the various markets. “This was most notable around the regional bank crisis and its potential impact on commercial real estate and credit markets, and then again toward the end of the year with the return of term premium and the re-emergence of the Fed easing expectations for 2024,” Kolanovic said.
“Our team excelled by working together, providing deep, unbiased insights and connecting the dots across markets, regions and asset classes,” he added.
The buy-side agreed, according to Institutional Investor’s 2023 ranking of Global Research Leaders, which recognizes the sell-side providers with the highest number of total team positions across II’s annual equity, fixed-income, and developed and emerging market surveys.
J.P. Morgan extended its reign as the No. 1 global research provider to four years. The firm continued its upward trajectory by once again increasing its number of team positions from 280 to 289 across II’s eight surveys, which include the All-America Research Team; the Asia (ex-Japan) Research Team; the China Research Team; the Developed Europe Research Team; the Japan Research Team; the Emerging EMEA Research Team; the Latin America Research Team; and the Global Fixed-Income Research Team.
Further down the leaderboard, there was little movement at first glance. While BofA Securities repeated its second-place finish, a narrow margin separated the firm from pole position. The firm notably increased its team positions from last year’s 250 to 286. Morgan Stanley and UBS were once again third and fourth, respectively. Barclays rose one position to crack the top five.
The competitive landscape continued to evolve, with UBS acquiring Credit Suisse in June, which bolstered its research, according to Dan Dowd, head of global research and Evidence Lab at UBS Investment Bank. “Last year, with the integration of colleagues from Credit Suisse, we were able to strengthen our top quality and highly-ranked analyst platform,” he said.
Dowd credited UBS’s platforms breadth and scale, in addition to its proprietary data offerings across Evidence Lab, Quant Research, and now Credit Suisse’s HOLT framework, all of which are a direct response to clients highlighting the increasing importance of data in their investment process.
“Continually evolving our product and content offering to meet the changing needs of our clients is critical to maintaining our relevance,” Dowd said.
The start of the year has already posed questions for sell-side research firms to answer for the buy side, including how the already priced-in soft-landing scenario will play out against the backdrop of heightened political uncertainty, according to J.P. Morgan’s Malik.
But among these macro themes — which includes U.S. elections — it’s important not to lose sight of the micro. “While navigating this macro backdrop will be critical to performance, we think there will be a lot of opportunity in 2024,” he said. “Specifically, navigating valuations of both the market level and the relative performance of different sectors and companies—which is the bread and butter of the research organization—are likely to create meaningful value.”
