There’s a new leader in Asia equity sales.
Citigroup was chosen as the top seller of equity research in Asia — excluding Japan — in Institutional Investor’s 2019 All-Asia Sales Team. The result was determined based on responses from some 1,600 investment professionals representing more than 650 buy-side firms, who rated providers on their sales coverage across 12 countries and sectors.
This year — in line with other sell-side rankings produced by II — voters’ responses were weighted based on their relevant equity commissions. Citi debuted at the top of this new commissions-weighted leaderboard, followed by UBS in second. Morgan Stanley placed third, while CITIC Securities-owned CLSA took fourth. Credit Suisse rounded out the top five.
The new methodology for weighting responses debuts as regulation such as Europe’s revised Markets in Financial Instruments Directive continues to reshape the sell-side industry.
MiFID II unbundled research budgets from trading in January of last year, but its full ramifications outside of Europe are still in flux, according to providers. “Our approach is to continually evolve with the changing requirements of our clients, particularly in a post-MIFID II environment,” said Angus Richardson, head of Pan Asia cash equity distribution at Citi. In this environment, clients value — and will pay for — a firm that is “leveraging technology, data analysis, higher value corporate access, and in-depth company analysis,” he said.
This requires that sales teams understand and work closely with their firm’s research department, Richardson explained. “Leveraging Citi’s highest value content in a very targeted manner in support of the clients’ investment construction process to help them outperform their benchmark is a continually evolving evolution,” he said.
The firm’s efforts appear to be paying off: In addition to leading the commission-weighted ranking, Citi also topped a second leaderboard weighted by each voting firm’s Asian ex-Japan equity assets under management. The first-place ranking was a significant improvement from last year, when Citi placed fourth.
Elsewhere in the AUM-based ranking, Morgan Stanley moved up a spot to second place, while last year’s top firm, UBS, slipped to third.
[II Deep Dive: Trade Tensions Made Investing in Asia ‘Painful.’ These Research Providers Can Help.]
Citi’s improvement was not the result of staff changes, according to Richardson, who did not report any additional hires or changes to the regional sales squad at the firm. However, he said that increased collaboration among salespeople across the countries of Asia has been key to the team’s success.
“A good sales team is diverse in culture, gender, and experience and is extremely well coordinated across specific country coverage in Asia and across the whole Asian region,” Richardson said. “The sales team has a total understanding of the clients’ investment methodology, delivering the Citi platform in a timely and targeted manner which supports the investment professionals’ portfolio construction process.”
The past year has been particularly challenging in Asia, thanks to monetary policy tightening by China, uneven emerging market currencies, and renewed trade tensions between the U.S. and China. But Richardson said opportunities remain for provider that stay committed to the region.
“The opportunity for the Citi sales organization within the broker dealer is to continually evolve with their clients and continue to be the best for the clients by understanding what they need and will pay for in a resource-constrained environment,” Richardson concluded.
