Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Wednesday, February 10, 2010

Themes in IR – similar challenges in the Gulf, Russia, US, EU...

What a week; commissioned to run Investor Relations courses in Dubai and Moscow in the same week. And yet despite the cultural differences, IR remains constant.

First to Dubai to moderate a 3 day course on “Creating a world class investor relations strategy in tough times”. Very fortunate to have an excellent group to work with, from across MENA. Listed companies from Abu Dhabi, Jordan, Bahrain and Dubai, ranging from financial institutions to food and beverage.

And then on to Moscow (by the way it was a 40 degree temperature change...), to moderate an event at the British Embassy on attracting investment to Russian public companies, see here for detail, followed by a one day course for 35 Russian listed companies.

They could not be more different you would think. However while many issues are common not only to Gulf and Russian companies but also global investor relations people, there were some that were specific to those markets.

At the top level, IR teams are keen to ensure that investors get what they need by way of information about the company. Clearly, international investors when looking at emerging markets need an understanding not only of the company, but the environment in which the company is working. Economic conditions in Dubai (recently hugely changed) and Russia are important. IR presentations and materials therefore need first to set out the economic and market context, and only then discuss the company.

A second issue that people mentioned was the challenge of getting management/ board attention to the IR process. By and large, EU and US IR teams are able to count on the interest and commitment of their boards. Not so in either Russia or the Gulf. Without being able to count on providing management access to investors, or to provide insight into the company's future, IR becomes difficult (impossible?).

The third issue mentioned, was the challenge of understanding who the shareholders are. This is obviously the heart of IR and without understanding the profile of existing shareholders, it is hard to create a strategy for improvements. There are significant barriers, with foreign investors limited for example to equity swaps in some cases.

Fourth, the absence of a peer group. Whilst in the UK, Europe and the US, benchmarking against a peer group is standard, the lack of a genuine, local peer group is difficult. Comparisons with international peers are less appropriate.

Finally, I was very struck by how well international candidates are doing with the IR Society certificate. Since this is based around international best practice, enthusiasm to learn and follow international best practice investor communication is growing fast.


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