Last year saw a plethora of market sea changes — but the top global sell-side research firms were there to help institutional investors steady the ship.
“2022 presented many challenges for markets,” said Hussein Malik, co-head of global research for JPMorgan Chase & Co. “With persistent inflation, central bank tightening, the war in Ukraine, the rise in energy prices, and the decline in market liquidity, 2022 was a challenging year for markets. As goal posts moved across many of these key drivers for markets, our researchers had to adjust their thinking to provide their best ideas to clients.”
It was a year of “transition,” according to BofA Securities’ head of global research Candace Browning. “We started the year with very low interest rates, and high growth. We ended the year with lower growth, and higher interest rates, and higher inflation,” she said. “I think that it was a year that was characterized by changes in the macro environment, which obviously presented a lot of challenges, but it also presented opportunities. It was a year of enormous change.”
Morgan Stanley’s global director of research Katy Huberty concurred. “Macro dominated markets, but our strategists had the right market call heading into the year,” she said. “As a result, our sector analysts were able to focus more closely on the trajectories of their industries and companies coming out of the pandemic — which trends were likely to revert, and which elements have permanently shifted.”
Despite — or maybe because of — this volatility, the buy-side has stuck with a cadre of top firms in Institutional Investor’s 2022 ranking of the Global Research Leaders, which recognizes the sell-side research providers with the highest combined total number of positions earned across II’s annual equity, fixed-income, and developed and emerging markets surveys.
This year, JPMorgan has once again taken the top spot, extending its reign as the world’s No. 1 research provider to three years. The firm increased its total number of positions from 269 to 280 across II’s eight rankings, 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.
JPMorgan’s first-place finish came after it racked up the most team positions in both equity and fixed income research, marking the second year that the bank has led in both categories.
“We pride ourselves in the quality of our team, which encompasses unparalleled experience, innovation and rigor in its analysis and thinking,” said Marko Kolanovic, PhD, chief global markets strategist and co-head of global research at JPMorgan. “The depth and breadth of our coverage is unmatched and we are focusing on connecting the dots on a global basis.”
Following JPMorgan on the overall ranking is BofA Securities, which maintained its second-place finish with 250 team positions. This year BofA once again captured the most first team positions with 80 — 21 more than JPMorgan.
Skillfully navigating the macroenvironment was key to differentiating BofA’s offering, according Browning, as well as the ability to pivot. “You have to have a really strong macro team, and a very strong macro view,” she said. “You need to get it right. But then, when you get into other times — I would argue we’re in one of those today — where you see some choppiness around the indices, but not huge macro moves, then you really need to have the individual industry expertise to look at the relative value of the various securities that you’re analyzing.”
Adding value in times like these is what top research analysts do, according to Browning. “At the end of the day, there’s a component of education for research teams — telling clients something they don’t already know,” she said. “Then there’s also a component of identifying great value and opportunities. You need to make sure that you’ve got the team structured right, to provide that, in both the internal macro environment and individual stocks.”
Browning highlighted collaboration among BofA’s teams, including the March 2022 thematic report “Corporate Strategies for Net Zero,” which surveyed analysts on the decarbonization efforts at 3,400 firms around the world. “To produce research like that you need to have a great culture, in the sense that you can question each other,” Browning said. “We have that culture, where people can agree to disagree. We try and foster both collaboration and lively debate.”
Next up after BofA on the global leader board was Morgan Stanley, which repeated its third-place overall finish with 187 team positions. The firm was followed once again by UBS and Citi in fourth and fifth, respectively.
The value of research rises in periods of complexity and volatility, and Morgan Stanley’s model capitalizes on that, according to Huberty. “We focus on developing well-considered and front-footed views covering a spectrum of possible outcomes — including bull and bear scenarios, not just a central case,” she said. “When volatility rises, it’s invaluable to have a sense of risk and reward that’s analytically driven rather than an in-the-moment reaction.”
For example, Huberty reported that Morgan Stanley’s U.S. equity strategy team leveraged a host of analytical tools to better accurately call S&P 500 rallies and drawdowns. Additionally, the firm completed a rebuild of its economics and energy teams in 2022.
Huberty said that Morgan Stanley approaches its market, macro, and sector coverage with a global, cross-asset, and collaborative lens. “The close connectedness among our economists, strategists, and analysts worldwide gives us a unique perspective that enables comprehensive analysis of far-reaching themes like the energy transition, supply chain restructuring, tech diffusion, and the post-Covid consumer reversion,” she said, citing it as “the hardest type of research to do,” yet the “most impactful” for every type of client.
JPMorgan’s Malik echoed that sentiment: “In turbulent times, the role of research is of utmost importance,” he said. “We used frameworks based on analysis and experience to inform clients of our best thinking on economies, markets, and companies. It is also increasingly important to have a global view and to appreciate the connections across asset classes.”
Recently, JPMorgan has added significant resources to its data science and engineering teams and has started to leverage its proprietary analytical tools across the franchise, according to Malik.
JPMorgan has also done significant work around global energy markets and the energy crisis, tracking and forecasting inflation and central bank actions, paradigm shifts such as investors moving from growth to value stocks, and technical developments such as liquidity and volatility across markets, according to Kolanovic.
“As economies slow, the focus will remain on macro developments and the likely onset of a recession,” Kolanovic said. “As the cycle inflects, investors will again focus on fundamentals of individual companies. Sell-side research will need to highlight the connections between global macro developments, sector and corporate fundamentals, as well as technical parameters such as flows, positioning and liquidity.”
