How to engage investors during the good and the bad

Facilitating regular engagement touchpoints for retail investors year-round can mitigate divestment, creating a more stable and resilient investor base.

min read

Introduction

The 2024 ASX market reflects a balance of optimism from strong corporate earnings and caution due to high interest rates and inflation concerns. Understanding how to engage investors effectively during these fluctuating conditions is crucial. Whether your company is thriving or facing headwinds, strategic investor engagement can make a significant difference, especially leading up to results season.

Although they often hold a smaller portion of the company, retail investors outweigh institutional investors in number and their heightened sensitivity can drive broader market sentiment. With a greater focus on market transparency and ASIC fines for penalties ranging from $100k - $1M in 2023, it is clear companies need to qualify how well investors are receiving and understanding information.

First, we need to consider the internal and external factors impacting investor perception.

Internal factors

Projected or actual profit: Financial performance and future profit projections can significantly influence share prices. Positive surprises or favourable future projections usually lead to share price increases.
Company management reputation: The market's opinion of your company management.
Corporate actions: Corporate takeovers and mergers can impact your share price.
Technological innovation: Introduction of new and innovative products which show potential for strong future profit growth.

External factors

Economic factors: Interest rates, inflation, exchange rates, and overall economic growth impact production costs and demand.
Politics: Government policies, such as taxation or increased funding for specific sectors.
Foreign financial markets: Australia’s economy is closely tied to its trading partners in the USA and China.
Commodity prices: Prices of commodities like gold, oil, and iron ore significantly influence the share prices of companies in the resource sector which cover 30% of the ASX.
Other external events: Non-economic events, such as the COVID-19 pandemic or conflict, can drastically increase uncertainty in the market.

Develop a resilient communication plan for retail shareholders.

Identify triggers: Identify which of the factors above are directly or indirectly affecting your investor sentiment score based on interactions and feedback from investors.
Repurpose information in accessible formats: Offer best practice accessibility for investors by ensuring information is adapted to be easily digestible.
Develop a question register: Build out a question registry of curated messages that align with the goals and values of the company. Diolog provides a set of customised question templates to help you answer the most difficult concerns that your investors may have in an efficient, consistent and compliant manner.
Coordinate consistent responses: Ensure you have a streamline question workflow that allows for direct communication with investors.
Find out what works and what doesn’t: Find out what resonates with investors the most, by collecting data and finding out where questions are coming from.

Having a comprehensive retail engagement plan in place is crucial to manage the impact of market sentiment, which can significantly affect share price and investor confidence. Preparing for potential crises with clear communication strategies ensures that you maintain transparency, mitigate investor concerns, and stabilise your share price.

Diolog establishes the process for monitoring retail investor chatter so you are always aware of what retail investors are saying to ensure you deliver the most effective communication strategy.

Create more investor engagement touchpoints with Diolog - book in a demo today!