While the headline topics from both of IR Magazine’s conferences in South East Asia and Greater China would be familiar to many professionals in Europe and North America – activism, Mifid II and communicating in a crisis – they also provided a timely reminder of how the regions’ capital markets differ from their western counterparts.
At the South East Asia event, held on what was once the trading floor at Singapore Exchange (SGX) headquarters in Singapore, a series of panels looked at the evolving role of IROs across the South East Asia region. Lay Chew Chng, CFO of SGX, opened the event with an enthusiastic welcome to all attendees. He reminded them of the importance of good IR in cementing the reputation of local stock exchanges among a global audience, and the responsibility they owed to their stakeholders.
With such wide variation in listing requirements, capital markets rules and culture in Thailand, Malaysia, Singapore and the Philippines, much of the day was spent comparing and contrasting best practices across the region. The conference’s first panel featured two IR professionals nominated for multiple awards at the IR Magazine Awards – South East Asia 2017 (held later the same day), both of whom spoke about their senior management team’s evolving appreciation for the IR function.
One panelist had a seat on her firm’s strategy, finance and IR councils, working closely with her CEO and gaining valuable experience along the way. Her advice for fellow IROs was to ensure communication lines run efficiently across a company, organization or business division to ensure all parties are as clued-up as possible.
Two more panels that examined crisis management and the advent of investor activism trod similar lines. Though one speaker pointed out that investor activism is still relatively nascent in South East Asia, knowing your company inside and out – as well as identifying allies in the market – can mean you are alerted in advance of any big shifts in your shareholding.
As for crises, the audience heard from panelists about how a seemingly innocuous situation can spiral out of control without proper attention. One noted that a careful media strategy, good availability to answer questions and the support of the C-suite could make a world of difference.
Afternoon delights
After some exchanging of business cards and stories over coffee, it was time for a session that always proves popular: a Q&A with the buy side and sell side. One buy-side panelist was something of an ESG expert, so conversations about identifying such investors and their unique demands took center stage, while an IRO described balancing buy-side and sell-side demands during a recent complicated demerger as ‘crucial’ to its success.
Finally, with the afternoon’s awards only hours away, two of the day’s most-nominated IROs took to the stage alongside two IR experts to unpack the attributes that make for award-winning IR programs. According to the latest IR Magazine Global Practice Report, Asia’s IR teams are smaller, less well financed and busier than the world’s average, meaning they often comprise multi-disciplinary financial experts who have built up a great deal of experience across the company or sector they operate in.
The need to co-operate with other IR professionals and encourage each other into better practices, said one panelist, is paramount to improving the standing of the profession. This thread ran consistently through both the South East Asia conference and its sister event in Greater China, hosted in 2017 at the Conrad Hotel in Hong Kong. Another panel that examined the attributes of an award-winning IRO touched upon many of the same points, though all three speakers drew attention to the importance of considering ESG issues that could be important to one’s investors.
Companies listed on the Hong Kong Exchange have, since 2016, been mandated to report on ESG issues on a comply-or-explain basis, said one panelist, leading many investors to expect this information from IR teams as a matter of routine. Though regulations for Shenzen and Shanghai-listed companies are not quite as strong, the tide is definitely turning in Greater China.
Good governance
Indeed, the prevalence of ESG – especially the ‘G’ element of governance – in the region’s capital markets was central to many of the day’s discussions in Hong Kong. To start, attendees were given a 15-minute roundup of where IR was headed in 2018 by a fund manager who warned of the need to anticipate the impacts of Mifid II and the ‘passive shift’ that had already been felt in western markets as well as other governance-related changes.
Trends that had been seen across the Pacific and Atlantic oceans would take on a different form in this part of the world – something the audience was reminded about during panels that examined shareholder activism and crisis management. Two experts on the former outlined the importance of proper preparation to deal with any investors who might want to throw their weight around, as well as identifying internal and external allies in your quest to communicate in ‘an agile and transparent manner’ with the market.
One panelist said that in his experience of helping corporates predict and navigate activist interest, corporate governance issues were always a ‘live issue’, and that identifying any areas that may cause concern for investors in advance was key to communicating with them effectively.
This advice rang true for those navigating a crisis, as illustrated by one panelist’s efforts to communicate to the market that rumors surrounding his company’s chairman were not, in fact, true. Identifying where your priorities lie, and which stakeholders require the most attention at which time, is a crucial part of successfully negotiating through any crisis, he advised.
After a lively break for coffee and introductions, there was a chance to grill two buy-siders alongside two prominent IROs. One portfolio manager laid out his pet peeves for the sell side and IR, including unnecessary meetings, lack of communication and a dearth of opportunities to visit business divisions or management a little lower down a company hierarchy that might allow him to ‘really get to grips with the business’.
Research was also examined as all panelists agreed the changes wrought by Mifid II in Europe and North America would inevitably affect how the larger investment houses charged for research and corporate access in Greater China.
This article first appeared in the Spring 2018 issue of IR Magazine