Skills you’ll need to work in equity research

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Equity Research Skills

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Investment banks will often cite communication skills as a requisite for any front office job, but in equity research this is genuinely a key requirement. Not only must your written communication skills be top notch to succinctly portray complex ideas in easily digestible language, but senior analysts are also rolled out in front of the financial press. This means your verbal communication skills must be top notch to relay often-complex arguments to a not-necessarily-specialist audience. Then on top of all this, there's the client interaction.

“Communication is critical, as analysts spend tremendous amounts of time interacting with clients in particular – explaining rationale, answering questions, or presenting to groups,” says Matthew Thomas, head of Russian/CEEMEA oil and gas equity research at Barclays in London.

Thomas says that an equity research analyst is in charge of a “small business chain” meaning that their performance is largely within their own control. This requires not only self-starters able work relatively autonomously, but it also broad range of seemingly disparate skills.

Research is first and foremost about having questions of your own before answering other people’s questions

“The job requires not only micro-analytical skills, such as understanding financial accounts, a company’s business model, or the strengths and weaknesses of management, but also a solid understanding of macroeconomic trends or key political issues regionally or globally that could affect ones’ stocks or markets in general,” says Thomas. “That is, an equity analyst is at once both a specialist and a generalist in finance, economics, and politics.”

Essentially, as an analyst you’re using quantitative and analytical abilities to see and tell the 'story' in a company’s numbers.

“Research is first and foremost about having questions of your own before answering other people’s questions,” says Zafar Khan, head of aerospace and defence equity sector research at Societe Generale Corporate & Investment Banking.

Any perception that an analyst’s role is calmly sitting on the trading floor typing up your latest reports while salespeople and traders frantically take client orders around you is misconceived. Equity research, despite its analytical nature, is fast-moving and you need to be calm under pressure.

“Equity research provides stock recommendations for constantly moving markets, so analysts require an ability to quickly process large amounts of information, whether data or news items,” says Thomas. “On any given day, the basis for a particular stock call can quickly and abruptly change with an unexpected news item, press release, or market development, so an analyst will need the ability to act quickly.”

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