When market professionals think of Global Markets research it is easy to turn first to the large money-centre banks that employ hundreds of analysts and cover markets across the globe. While these institutions produce first class products there is increasingly a growing and real opportunity for smaller and specialised banks to enhance their standing with clients through research. The key often lies within regional and product specialisation and specifically playing to the business strengths of the institution.
Many of the top-tier banks in research are US based and dominate their home market. Still, all investment managers need perspective from other key areas, in both advanced and developing economies. A European bank is very likely able to offer a differentiating perspective on issues such as ECB politics, the functioning of the European Commission or a deep dive into the member countries. These themes present significant opportunities for banks to obtain the desired “trusted advisor” status with key clients in their areas of expertise.
Another example, the intricacies of the Japanese economy and specific companies are most likely best covered onshore by those who are able to connect and investigate. The global investor likely will be very interested to hear the views of analysts with such a thorough local insight.
Such specialisation can go even deeper. Consider the example of the various equity markets in Latin America. The local research house or bank has a considerable advantage to provide deep insight into local companies as well as the economic and political risks facing that country. Such analysis may be more difficult for those sitting in New York or London to achieve.
In addition to geographical specialisation financial instruments can provide pockets of expertise. For example, some banks are highly skilled at financial derivatives, commodity futures or emerging market credit. These are further examples of where research expertise can raise the standing of specific institutions by providing a quantifiable differentiator to the sales force and boost client interaction and business.