Speakers at IR Magazine South East Asia Conference share advice for weathering 2012
Next year is going to be an uncomfortable one for banks, companies and investors alike: the best prognosis for any part of the world is slow growth.
Much of this, said S&P Capital IQ’s director of equity research Lorraine Tan, can be attributed to the euro zone crisis driving sentiment down.
Speaking at the IR Magazine South East Asia Conference in Singapore today, she noted that while the euro is not expected to completely fail, the prognosis for the zone is recession in the first half of 2012 followed by a moderate recovery in the second half.
Gloomy outlook
‘There are a lot of borrowing needs coming out of the euro zone that need to be addressed,’ she said, citing its €287 bn ($384 bn) spending gap and the dour levels of confidence that have led to low bond yields in the zone.
Likewise, the US faces a sluggish growth rate of 1.7 percent, half of what it has seen over previous decades.
Even the powerhouse of China, at one point widely viewed as an economic saviour, faces slow growth primarily due to a drop in exports.
And in the rest of Asia, there is even a possibility of technical recession for the financial hubs of Hong Kong and Singapore – albeit a short and shallow one, said Tan, who dubbed the slow economic growth worldwide a ‘doomsday recovery’ in a play on popular predictions that the world will end in 2012.
With all the doom and gloom, investors, institutional and retail, are likely to need a lot of reassurance. And with a bit of effort, say investor relations veterans, it’s quite possible to provide that.
CapitaLand’s advice
One way of increasing investor confidence in your company is to help them refocus, said CapitaLand’s head of IR Harold Woo.
Just recently, the residential segment of the real estate market was stressed by property tightening measures from the Chinese government and cooling measures from the Singapore government.
Although CapitaLand’s total exposure to the segment in both markets comprises only 20 percent of its balance sheet, its share price was disproportionately affected.
The IR team’s response was to emphasise its core markets in Singapore and China, which comprise 70 percent of CapitaLand’s balance sheet, so that investors would be able to more clearly focus on its strengths in these areas.
Turning round ‘sells’
Another panelist at the conference, StarHub’s head of IR and corporate communications Jeannie Ong, suggested that it is more effective to spend time with analysts who make a ‘sell’ call on your company.
‘I don’t believe in preaching to the converted,’ she remarked. ‘I would rather convince [those analysts who give a negative review] to change their minds.’
Speaking during the same session as Ong, Nomura head of client strategy Cara Eio observed that brokers could make major contributions to a company’s IR efforts, whether by helping it gain exposure or by gathering investor feedback. ‘Work with your broker. They will be very helpful to you,’ she advised.
And Christopher Wong, senior investment manager at Aberdeen Asset Management, pointed out that the most important thing an IR officer can do is to wholeheartedly and authoritatively represent the company.
‘IROs must know the company and be able to speak for the management,’ he said. ‘They cannot just be a gatekeeper.’
IR Magazine South East Asia Awards
This was also a common thread in the acceptance speeches given by winners of the IR Magazine South East Asia Awards, which were held immediately after the conference.
One after another, award-winners such as SingTel, Keppel Land and Santak Holdings cited broad-based efforts by IR teams, supporting departments and senior management right up to the CEO as key to good IR.
The boldest suggestion of the day, however, probably came from CapitaLand’s Woo, who cited his own company’s recent launch of a major residential project despite uncertainty in that segment.
Speaking at the sidelines of the conference, he remarked that although market reaction to the launch had been surprised and somewhat negative, it had turned out much better than predicted and might even potentially improve investor sentiment.
For those companies without the resources or the risk appetite to try a large venture during a downturn, he had a simpler piece of advice: ‘Be consistent.’
Find out who won at the IR Magazine South East Asia Awards 2011.
