Boston Consulting Group (BCG) released its eleventh annual survey of investor sentiment. BCG surveyed more than 250 portfolio managers and buy-and sell-side analysts from across the globe in November and December 2019.
Now, they are sharing the survey results in their recent article “Investors Want Companies to Be Resilient and Bold.” Here are the key findings:
- 71% of respondents anticipate a recession within the next two years
- 74% expect a recession— if it does occur —to be mild (with a contraction of less than 2% in real GDP)
- 46% expect a recession to last more than one year
Despite investors expecting a recession, they still want companies to invest in opportunities that have the potential to deliver strong and sustainable total shareholder return. Respondents said that 50% of companies need to invest more aggressively in digital capabilities and technology. Respondents also believe that approximately 40% of companies should be more aggressive in pursuing investments in R&D, marketing and sales capabilities, and other avenues for innovation, such as corporate venture capital.
“A company needs a deep understanding of its investors’ expectations and preferences so that it can align its strategy with the right ‘natural investor type’—for example, those focusing on yield, quality value, growth at a reasonable price (GARP), or aggressive growth,” said Hady Farag, a BCG partner. “A broad-based approach includes not only traditional investor relations, but also newer topics that are rapidly gaining in importance, such as sustainability and diversity.”
The survey highlighted three key ways to build resilience and invest to win in the long-term; prepare a recession plan, continue to invest in growth, and take a proactive, broad-based approach to winning with investors this year and beyond.
With recent market activity placing fear in many business owners, it’s important to ask yourself – Is your company ready should a recession hit? Don’t delay in making a recession plan so that your business can continue to thrive for years to come. Our team can help – contact us to learn how.