Investor relations gains significantly higher profile in the region
The aim of investor relations is, by definition, to transparently and comprehensively provide the financial community with all the information it needs to be able to assess the development of a company’s value.
This kind of comprehensive information policy and an active exchange with stakeholders pay off for companies, as those two elements are the prerequisite in order to create an advantage of trust on the capital markets and therefore achieve a promising position in the tough competition for investors and borrowed capital.
Increasing the turnover of shares is of major strategic importance to avoid market price fluctuations due to lower turnovers and/or undervaluation. Transparent communication also contributes to those responsible for IR knowing the company’s investors very well, which makes it easier to address them in a targeted way.
International information and transparency requirements are becoming ever-more complex, though, which is why IR is even more important at companies in the Middle East. Whereas the market tended to be seen as rather local years ago, more and more companies are now opening up to international investors.
The reasons for this lie mainly in the need for fresh capital. Companies in the Middle East had to see the need to meet international communication standards first of all but IR is gradually gaining a significantly higher profile in the region. It’s not just companies that are being challenged, however. Stock exchange operators themselves have the responsibility to create an attractive environment for international investors; many of them have already realized this.
For example, the Qatar Stock Exchange and Iridium Investor Relations have designed a program for its issuers that will hopefully set a precedent: its IR Excellence Program, which rates the professionalism of investor communications to recognize best practice in IR work, honor its implementation and encourage other companies to use it as guidance.
The rating shows that, above all, what matters are a high-quality company presentation and the provision of information in digital media, and that these are classified as trustworthy.
Access to international distribution networks will also gain importance in future in order to immediately and purposefully reach international media and investors at the same time.
The good thing is that today’s technologies make it possible to quickly and efficiently raise IR to a professional level and therefore achieve success swiftly, too. Companies in the Middle East that want to develop their IR and give transparency higher priority can therefore achieve their goal in just a few simple steps.
Here are my recommendations:
- Think globally and use global transparency standards as your guide. These include a regular news service and an appealing presentation of the company in the media
- Use modern IR tools. Technology will help you to manage the greater challenges and organize your daily IR work processes to be lean and efficient
- Work with partners that have international experience. They know what international investors’ requirements are and will help you to avoid typical mistakes when addressing your stakeholders.
Dirk Wagner is director of EQS Group FZ-LLC in Dubai
