GILES RAFFERTY, Corporate Communications and Media Advisor
It was in early May of 2023 that the World health organization announced Covid-19 was no longer a global health emergency. We are, however, still working through the economic disruption caused by COVID, compounded by other significant geo-political events, such as the ongoing war in Ukraine, which has helped to drive post-pandemic inflation to multi-decade highs in most of the world.
In an attempt to rein in Australian inflation, we have seen the Reserve Bank of Australia raise the cash rate by a quarter of a percent five times during 2023. And while the tempo and quantum of these raises does not match the eight hikes during 2022, their impact on some already stretched household budgets is very much being felt. In turn access to growth capital has been restrained, consumer discretionary stocks are feeling the impact of household belt tightening, and the construction sector is experiencing building approvals at 11-year lows during 2023.
Away from the world of business and finance the success of the Matilda’s in reaching the semi-final of the FIFA women’s world cup, held in Australia, captivated the nation as did the failure of the Voice to Parliament referendum.
Keeping a watchful eye on guidance
Against this backdrop the FIRST Edition, the monthly newsletter published by FIRST Advisers, story that our audience found most captivating was the Approach to Guidance in 2023 and Same Day Reporting blog in August. It is not really surprising that, faced with economic headwinds of rising inflation, input costs and interest rates, companies are keen to know how their guidance compares to their peers and the wider market. Our analysis of reporting patterns revealed 81% of companies include some form of guidance in their 2023 Full Year results up from 53% in 2022.
Push back on the role of ESG
ESG has been another theme that has featured in our reviews of the most read FIRST Edition content of recent years. This year the Can ESG survive the political pushback? Blog was the second most viewed. It looked at the conflicting forces of investors desire for companies to embed ESG standards and principles in their disclosures and ‘anti-woke’ regulations seeking to dictate what factors institutional investors can consider when managing investments.
ESG issues, as a focus area for investors and Proxy Advisors, also featured in the third most clicked on newsletter article, Key Trends Leading into the 2023 AGM Season, alongside remuneration reports and Board composition. We noted HESTA as a front runner in promoting active investment to influence companies around addressing climate change rather than divestment.
How to win friends and influence people
Understanding the voting intention of institutional investors ahead of an AGM was at the core of our 4th most read article – Proxy Management and the Value of Vote Tracking. FIRST Advisers vote tracking, which combines our leading in-house shareholder analytics with expert Investor Relations advice, creates opportunities for companies to engage with the key shareholders to ensure they are fully informed and potentially create a favourable change in their voting intentions.
Rounding out our top 5 newsletter articles in the Using ASX Guidance Note 8 to Manage Earnings Surprises from back in May. This article explored how a company can assess if they are likely to surprise the market with an earnings announcement. We highlighted how a company needs to assess the impact on share valuation rather simply the magnitude of the earnings surprise when deciding what needs to be disclosed. In retrospect the interest on this earnings surprises blog may have foreshadowed the levels of interest we saw in our analysis of corporate guidance in the most clicked on blog in August.
Keeping a finger on the pulse of 2024
The jury is still out on whether we are at the end of the Reserve Bank of Australia’s rate rising cycle and what impact the rises that have already been announced will have on listed companies into 2024. As for inflation, Australian CPI came in at 5.4% in the September quarter, which is much higher than the RBA’s target of 2% to 3%. There is, however, evidence of a deceleration in inflation, CPI was at 6% in the June quarter and 7% in the March quarter.
As 2023 draws to a close it does feels like we are near a peak in the rate rising cycle and FIRST Advisers, through our FIRST Edition newsletter, will continue to provide insights and updates on key issues of interest to investor relations in 2024. As an integrated IR consultancy, we combine expert advice backed by our leading edge, in-house analytics capabilities to add value to a company’s IR function and help build a supportive shareholder base. We also offer our best wishes to our clients and business partners for the festive period.