Stock market: should you be afraid to communicate in times of crisis?
The health crisis is now giving way to an economic crisis. In these troubled times, issuers – and listed SMEs in particular – are wondering whether they should continue to keep the market informed. And they have many good (or not so good) reasons for not doing so:
- « the news is not good »
- « no one will pay any attention »
- « the situation changes every day and we can’t be sure of anything »
- « in times of crisis, financial communication is not a priority »
- « I don’t want to seem like a salvager »
- etc
And yet :
- global stock markets remain very active
the number of share transactions recorded by Euronext in March was 3 times higher than the average for the last 8 years, and volumes, even though calculated on the basis of sharply falling share prices, were almost 2.5 times higher. In a recent study, the AMF estimates that nearly 600,000 individuals bought shares between the end of February and the beginning of April. In April, trading volumes in equities remained 20% higher than the 8-year pre-crisis average.
- investor interest has continued unabated since the start of the crisis
if the equity market decline has been combined with very high volumes, it’s because investors are active, selective and hungry for information that enables them to arbitrate their portfolios and take advantage of the best opportunities.
virtually all the information meetings scheduled since March have been transformed into remote meetings. Investors, who are generally less present in this type of format, showed considerable attendance and interest, with very active meetings and numerous exchanges with company management during the Q&A sessions.
- financial reporting regulations continue to apply, even if some rules have been adapted
more flexibility on the deadlines for publication of annual reports and on the organization of shareholders’ meetings, but the obligation of transparency and prompt disclosure of all insider information (and there is a lot of it in times of crisis) applies unreservedly.
So what can we do? between a cautious silence and an assertive realism, which do investors prefer?
Here are 4 recommendations for effective financial communication in times of crisis:
1. keep in touch with your shareholders
you can’t meet investors at earnings releases or roadshows, your Annual General Meeting is held behind closed doors… : don’t think that your shareholders have forgotten you. On the contrary: cancelling these appointments creates expectations and worries that can turn them away from your company if left unaddressed. This situation can easily be compensated for by written or digital communications, attesting to transparency and maintaining the bond of trust.
2. adopt remote communication
videoconferencing, webcasts, online video: these formats will be the norm for some time to come, so why not adopt them and make the most of them for your financial communications. Prepare yourself for the exercise and use them whenever possible: your audiences have adopted them and are in demand.
3. communicate precisely, even if it means admitting your limitations
what is the impact of the crisis, what will be your sales in 2020, your results?
Faced with risks and reduced visibility, requests are multiplying, but in many cases, you are faced with considerable uncertainty.
The vast majority of investors don’t believe that entrepreneurs are supermen. Communicate what you know: your current situation, your levers for action, the measures you’ve put in place, your cash flow. There’s no need to speculate beyond that: show that you’re in charge, backed up by competent and courageous staff, supported by loyal customers… qualitative and quantitative elements that can already be valued.
4. strengthen ESG (Environment, Social, Governance) communication
the short-term impacts of the crisis have generally been taken into account by the markets. They are reflected in your share price. Beyond the adaptation of your operations and strategy, which can always be highlighted with greater relevance, the crisis is having a profound and lasting impact on all companies and on the men and women who shape them on a daily basis.
- What’s the underlying reason for coming back to work?
- What makes us unique?
- How does our business impact society and the environment?
Non-financial communication on ESG criteria, and on the company’s raison d’être, will be more important after than before.
And we mustn’t forget that communication, especially in times of crisis, needs to be prepared, planned and deployed with precision, both in terms of the choice of devices and messages.
For more information, contact mathieu.calleux@calyptus.net – +33 1 53 65 37 91
