Four things we learned at the IR Magazine Forum – South East Asia 2019
IR Magazine returned to Singapore for the IR Magazine Forum – South East Asia 2019 after attracting more than 130 senior IR professionals to the previous year’s event. As in previous years, the 2019 forum saw IROs from Indonesia, Malaysia, the Philippines, Singapore and Thailand in attendance, ahead of learning the results of the much-coveted IR Magazine Awards later that afternoon.
But the conversation had expanded from last year’s topics after a year of relative economic unease, as well as progress in the region’s capital markets. Below, we run through just four of the talking points that could set the IR agenda in South East Asia this year.
A mixed macro outlook for the next decade
Heading into 2020 there is something of a ‘full calendar’ of events that will have an impact on the capital markets, said Jeff Ng, managing director and chief economist for Asia at Continuum Economics, as part of his opening talk that examined the current macroeconomic climate. To name a few, these include the ongoing impact of the US-China trade war, domestic volatility in Hong Kong, economic downturns across European economies and – of course – the protracted Brexit process.
Though the Summer Olympics to be held in Japan later this year could provide a boost to local economies, Ng said the general picture was one of ‘slowing global growth’, with even China’s burgeoning growth showing some signs of relaxing.
‘Whatever is important for China right now as part of its development is showing some signs of weakness in terms of slowdown,’ he explained, with exports from the US to China dropping off considerably. Other indicators showed that retail sales, the country’s property and employment markets, and measures of activity in the Chinese service industry were all dropping off, too.
This would likely have a knock-on effect of some kind on surrounding economies, added Ng, as it appeared even Beijing was willing to accept that growth in 2020 will be slower than before.
The rise of passive is making it harder to stand out
The day’s final session took a form that has been popular at IR Magazine forums around the world – a Q&A session with members of the buy side and sell side.
One question from an IRO in the audience concerning an underperforming email marketing campaign illustrated a point that was explored in depth on the panel. The IRO had invested time and resources to create a video interview with members of the C-suite that aimed to answer investor questions, but response to the video had been disappointing, bordering on non-existent.
While Sid Choraria, an Asian equities investor, advised the IRO to perhaps tailor the format of the communications – be it email, social media or otherwise – to match the investor targets, another panelist disagreed.
Talib Dohadwala, managing partner and portfolio manager at Integral Capital, said a lack of response to the emailed video could be due to the rise of passive investment, with ETFs and index funds having ‘significantly taken over the total market share of investable assets’ in recent years.
Though it may be a function of active management underperforming passive strategies – or a reflection of the fact that passive fund managers are less likely to engage with companies – Dohadwala said he had heard of many small or mid-cap firms missing out because of a lack of dialogue. He also explained that ‘closet indexing’ in the active space, where fund managers will ignore companies that do not appear in other indices due to a perceived added level of risk involved, could also contribute to this lack of engagement.
‘It’s an odd time in investing,’ Dohadwala added. ‘But if you can find the right intermediaries, or the right sort of Rolodex, there is still the right pool of investors out there in the active space. That’s how you have to reach out.’
ESG communications have to be joined up
Since being a regulatory requirement for SGX-listed companies, ESG reporting has taken off in the South East Asia region. But for Esther An, chief sustainability officer at City Developments and multiple ESG reporting award-winner, there is still a tendency for sustainability reporting to seem like a PR exercise.
‘It’s not about showing your chairman carrying babies or giving out food,’ she said. ‘So it has to be factual, transparent and quantifiable. I’m an advocate of external assurance for added credibility. The process has to move on from a siloed approach to a more integrated route.’
Adding to this, Natalia Rajewska, sustainable finance analyst at ING, said investors love to see ESG conversations led by the IRO and, in turn, kept open as a two-way street.
‘We want to see IROs who can link investors up with the head of sustainability or relevant business head, but are able themselves to talk about very in-depth details of sustainability and link it back to the firm’s business model, its strategy, its risks and opportunities, its growth potential,’ she explained.
Virtual assistants becoming part of the IR toolkit
The impact of technology on IR is a frequent topic of conversation across the world, but in Singapore we heard that virtual assistants – similar to those that power Amazon’s Alexa or Google’s Home devices – could be the norm for IR before long.
It’s something Melanie Morfill, sales director for Asia Pacific at Intrado Digital Media, has increasingly seen, particularly given the dearth of resources IR often has to contend with. Put simply, digital assistants can help IROs keep a steady grip on information about their investors, organize meetings and even boost online engagement, all via a voice-activated app.
Pattarawan Sookplang, senior manager for investor relations at Asia Aviation, said she was looking into automating a platform on her IR website to allow investors and analysts to make appointments directly through online calendars, but that an AI IR assistant was still a way off – though Air Asia’s booking website does feature AVA, the virtual assistant.
‘One thing to remember is that we’re still working in investor relations, so the human aspect is still very important,’ added Morfill.