IR departments react to huge volatility in global markets
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In a sign of how serious market regulators viewed the plunge in global stocks this week, the NYSE implemented a rarely used rule on both Monday and Tuesday in an attempt to prevent panic selling.
Rule 48 means market makers don’t need to disseminate prices before the opening bell. The idea is to help trading start sooner and support orderly buying and selling. Given that the Dow fell by more than 1,000 points first thing on Monday, you could conclude that either the rule didn’t work or things might have been a lot worse without it.
At the time of writing, markets are reacting positively to the decision by the People’s Bank of China to cut interest rates, with European and US markets heading upward. Still, it’s been a dramatic week for companies and their IR teams around the world.
Turbulent market moves of this kind affect IR departments in different ways. Some find themselves fielding more calls than normal as management and investors try to get their head around the situation. Others, though, have a relatively quiet time given that the investment community is so preoccupied.
I spoke to one IRO based in South East Asia late on Monday. He said he’d spent the day trying to check in with the firm’s shareholders but they weren’t picking up their office lines or cell phones. He had, at least, managed to ascertain that there were no particularly large funds getting out. And let’s not forget, he added wryly, for every seller there’s a lucky buyer.
