Overview
With a research coverage portfolio encompassing 287 equities across 26 markets as at year-end 2019, EFG Hermes’ Research division is the region’s leading provider of in-depth, real-time market insights, guiding the Firm’s various divisions and its growing client base when making financial decisions. The team’s ability to constantly expand its coverage and product offering and remain at the forefront of an increasingly competitive industry have earned the team multiple accolades in recent years, with EFG Hermes Research being named the top frontier markets research firm by Extel for the second year running in 2019.
Operational Highlights of 2019
In line with the division’s coverage expansion and product diversification strategy, 2019 saw EFG Hermes Research continue to build out its research coverage while, in parallel, work to improve the quality of its products. This allowed the division to continue to offer exceptional value to its readers, offering valuable and unique insights to its clients all around the world. During the year, the division initiated coverage on 35 new equities from both key MENA markets, as well as some of the fastest-growing FEMs. EFG Hermes Research also initiated on equities in new markets during the year – Ghana and Sri Lanka. At the same time, the department also strengthened its coverage of MENA and FEM markets already under its umbrella, with new over 35 new equity stocks added to the department’s coverage during the year. In addition, EFG Hermes Research initiated macro coverage on the Democratic Republic of Congo, Tanzania, and Nigeria. On the product diversification front, the division continued to tailor its offering to meet clients’ evolving needs and interests, initiating coverage of fintech stocks in 2019. The department was also involved in supporting several EFG Hermes-involved IPOs during the year including Aramco, Helios Towers, and Fawry. To support the geographical and sector coverage the research division expanded the number of analysts from 52 in 8 countries in 2018, to 55 in 9 countries as of year-end 2019, with a dedicated team in Nigeria established during the year.
The department’s unmatched ability to adapt to changing market dynamics and react to the evolving needs of its increasingly diverse client base not only earned EFG Hermes the title of top frontier markets research firm by Extel but also saw the Firm being named the Top Africa (Ex. South Africa) Equities House at the Financial Mail Top Analyst Awards for the second time in as many years. Similarly, seven of the Firm’s analysts were recognised in the top 20 of Extel’s 2019 MENA research poll, making EFG Hermes the second-ranked firm overall and the top-ranked MENA-headquartered firm in the poll.
Following the introduction of MIFID II, EFG Hermes Research’s ability to stand out from its competition thanks to its deep and comprehensive analysis has allowed the Firm to thrive even given the new regulatory framework. Under the new directive, the sell-side has had to decouple research from brokerage commissions for European clients. In turn, this has meant that the EFG Hermes research team has had to sell their research on an account-by-account basis to its clients across Europe and the UK. Leveraging the Firm’s reputation for exceptional research products and its long-lasting relationships with its European clients, the department was able to secure several new research clients. With the inclusion of Saudi Arabia in the MSCI Emerging Markets index in June 2019 and the subsequent rise in passive investment inflows in the country, the department has adapted its product offering to meet the rising demand for ETFs, with several clients now paying for passive investment research on an individual basis.
EFG Hermes Research Digital Portal
In today’s increasingly digital world, EFG Hermes understands that instant access to high-quality research products has become a necessity for investors, analysts, as well as the Firm’s other departments. As such, during 2019 the department continued to work on enhancing EFG Hermes’ digital research portal striving to further improve the overall user experience by ensuring a greater degree of personalization. The improved platform not only gives users access to one of the most comprehensive research libraries available in the industry, encompassing all historical news, reports, and commentaries produced by the Firm’s research team, but also allows for reports to be saved and archived for a later time, while also allowing clients to tailor their mailing preferences to receive only the coverage that most interests them.
New Products in 2019
Egypt One, launched in 2018, is a new retail research product that delivers daily briefings covering upcoming market-moving events and offering readers exclusive insights on the expected performance of markets and specific equities for the coming day. During 2019, the team continued to improve the platform, making coverage more generic and analysis easier to comprehend to cater more for retail investors. The department will work towards putting a more dynamic, fit-for-mobile publishing system in place to make Egypt One accessible wherever and whenever.
2020 Outlook
The global economy suffered a major shock in early 2020, thanks to the rapid spread of COVID-10 at a time when the post-2008 economic expansion was already mature. At the time of writing, governments in MENA and FEMs are joining those in major economies to limit the impact of the illness on public health and economic welfare. At this time of particular uncertainty, clients, investors and analysts are looking for incisive, accurate and timely research to help them navigate volatile markets, and EFG Hermes Research is ideally-positioned to capture this demand. Over the next year, the division will broaden and deepen its coverage while remaining faithful to its ‘quality over quantity’ philosophy. This approach, combined with the Firm’s substantial on-the-ground presence, has allowed our research to stand out from its competition in recent years. The division’s focus will remain on strengthening its coverage of MENA and non-MENA FEMs.