Malaysia Investor Relations Awards 2012

Transcription

1 Malaysia Investor Relations Awards 2012

2 About MIRA Overview Malaysian Investor Relations Association (MIRA) was established in June 2007 by Bursa Malaysia (the Stock Exchange of Malaysia), and funded by the Capital Market Development Fund (CMDF), a statutory fund under the purview of Securities Commission Malaysia. MIRA is the and only professional association for Investor Relations (IR) in Malaysia. Membership is open to public-listed companies, investment banks, brokers and intermediaries and IR service providers. MIRA offered, under the sponsorship of Bursa Malaysia, an IR Incentive Programme, fully subsidised by CMDF, to help public-listed companies set up an internal IR programme and obtain better exposure through IR. MIRA co-hosted Investor Expo 2008 & 2010 as platforms for public-listed companies to engage with fund managers and analysts, and for retail investors to gain knowledge on investment. MIRA organises the Malaysian IR Awards to recognise exemplary best practices in IR among public-listed companies and their management. MIRA offers the in IR, in association with the Investor Relations Society of the United Kingdom, which gives a professional for IR practitioners in Malaysia. MIRA offers, jointly with Bursa Malaysia, an IR Manual & Workbook to guide public-listed companies on principles and management of IR. MIRA hosts conferences, seminars, training and knowledge-sharing platforms. Board of Directors

3 Programme 6 June 2012, Mahkota Ballroom 2, Hotel Istana, KL p.m. Arrival and registration of guests and media p.m. Welcome Remarks by Ms. Audrey Ho Swee Fong Chairperson of Malaysian Investor Relations Association p.m. Speech by YBhg. Dato Tajuddin Atan Chief Executive Officer of Bursa Malaysia Berhad p.m. Keynote Address by YBhg. Datuk Ranjit Ajit Singh Chairman of Securities Commission Malaysia 1.00 p.m. Lunch 1.20 p.m. Awards Presentation 2.00 p.m. Networking Session 2.30 p.m. End 1

4 Chairperson s Message Dear MIRA Members and IR Advocates, On behalf of MIRA, the Malaysian Investor Relations Association, I am pleased to present to you the Malaysia Investor Relations Awards In this awards supplement, you will find contributions from corporate leaders, professionals and members of the Investor Relations (IR) community. Of course the focus is on IR, but there are pieces on corporate governance also, and I do hope you ll find the insights of these individuals an interesting read. Investor Relations Ms. Audrey Ho Swee Fong, Chairperson of MIRA. MIRA is five years old this year, so we can no longer claim that IR is something new. Many public-listed companies realise the importance of public relations and corporate communications, but too few recognise the values that good IR practices can contribute to the company. The primary objective of MIRA is to increase awareness of IR, and promote IR best practice in all public-listed companies in Malaysia. As the only professional association in Malaysia committed to promoting good IR practices and advancing the professional development of IR practitioners, MIRA has actively embarked on a range of initiatives to assist companies and individuals achieve good IR standards. The association aims to be at the heart of all IR-centric initiatives and create a vibrant and inclusive IR eco-system that practices the exchange of ideas which will help unfold corporate values through IR. IR is a unique discipline. It demands that an IR practitioner is a well balanced professional with proficiency in a combination of hard and softskills. For this reason, MIRA organises a diverse programme of different events on relevant subjects ranging from compliance to technical issues and practical matters. Recent programmes have included the Impact of Amendments to the Listing Requirements, What Directors Should Know About the Investor Mind-set?, Looking Beyond Financial Statements, and Adding Value Through Annual Reports. Workshops and seminars cover various topics that help companies and practitioners learn about 2

5 the latest guidelines and best practices within the IR industry, so that they can stay relevant and proactive in managing communications between their company and the investment community. The Awards With the increasing number of companies listing on Bursa Malaysia, it became evident to MIRA and the IR community that there was a need to initiate a Malaysia IR survey and help set standards for good IR practices. With this in mind, in 2010 we collaborated with Thomson Reuters Extel to commission the first Malaysia IR survey. Over 700 local and international investment professionals were invited to participate in the survey. This set the scene for the Inaugural Malaysia Investor Relations Awards, which was unveiled by MIRA in May At that event we celebrated the achievements of both companies and individuals in the IR field. Last year s success drew us back again this year to honour more Malaysian public-listed companies and individuals for achievements in IR. And while we celebrate the winners, this event serves to highlight to other public-listed companies and IR practitioners the exemplary IR practices that they might seek to emulate. I hope this occasion will also encourage both companies and individuals to embrace the spirit of good governance practices through the adoption and advocacy of greater transparency, and timely, fair, ongoing disclosure. This year we have expanded our awards and introduced four new categories to further benchmark key IR activities acknowledged by the investment community. The new categories polled include Best Business Knowledge & Insights of IR Team, Most Improved Service from an IR Team, Quality of Annual Reports/Formal Disclosure and Quality of Oneon-One Meetings. With the addition of the new categories, corporations will have a better appreciation of the diversity in IR activities and it will most definitely help boost the standards of IR in these new areas. The IR Awards ceremony aims to raise the bar for excellence in IR. Our goal is for the IR function to be regarded as an essential part of the corporate DNA. Before I close, I wish to express my sincere appreciation to Securities Commission Malaysia, the Capital Market Development Fund and our IR Awards Partner, Bursa Malaysia for their continued encouragement and support. I also wish to thank our sponsors and IR partners who have contributed generously in many ways towards this event. I hope this occasion will also encourage both companies and individuals to embrace the spirit of good governance practices through the adoption and advocacy of greater transparency, and timely, fair, ongoing disclosure. 3

6 IR Survey 2011 Overview To benchmark Investor Relations (IR) performance of Malaysian listed companies and IR professionals, MIRA had set out to commission a comprehensive, professional poll of all relevant buy-side and sell-side firms investing in or covering Malaysian equities, to provide results and rankings that would form the basis and actual data for the IR awards. The second Malaysia IR Survey for 2011 was undertaken between 17 October to 16 December 2011 by Thomson Reuters Extel where over 800 investment professionals were invited to take part in the survey. As with the 2010 Malaysia IR Survey, one vital element was to gather views and collect opinion not only on large cap companies that frequently have a considerable international shareholder interest, and coverage by regional/global brokerage firms, but also to cover Malaysian companies that are much more domestically focused. This is both to increase and deepen participation, and also to help stimulate interest in IR in Malaysia, as part of the drive for best practice and professionalism. The survey approach is based on: A carefully compiled questionnaire to help elicit as high response levels as possible. Provision of website for voting, as well as ed forms and telephone contact, to give the widest coverage and opportunity for participants. Highly targeted potential respondent listings, responses were only accepted from legitimate investment professionals at brokerage firms/ asset managers. Provision of final results, based on verified, weighted responses, to give validity to the findings, and to give greater value to votes from the more influential buy-side and sell-side institutions. 4

7 Study and Scope Separate rankings and results for companies and individuals were collected for the following categories: Large Cap Mid Cap Small Cap For each of these categories, there were separate nominations for: Best Company for IR Best CEO for IR Best CFO for IR Best IR Professional Best IR for an IPO Best IR Website Business Knowledge & Insights of IR Team Most Improved Service from IR Team Quality of Annual Reports/Formal Disclosure Quality of One-on-One Meetings Participants Over 800 buy-side and sell-side professionals globally were invited to participate in the survey. Only legitimate investment professionals investing in or covering Malaysia were included in the results. Investment professionals include those from asset management firms (of any proper type; long only, Sovereign Wealth Funds (SWFs), wealth managers, private equity and hedge funds) and brokerage houses or research providers. Voting Process Each voter will only be allowed to vote once, and it will be allowable for any voter to give partial response only (i.e. they do not have to complete every part of the question categories in order for their nominations to be accepted). When voting they will be encouraged to submit multiple nominations, scoring firms/ individuals in ranking order based on overall quality of knowledge, service and interaction. Results Calculation Once nominations have been received, checked and verified, at the close of the poll, calculation and compilation of results will be done. All nominations in each category will be treated separately, and used only to form the result for that category. There will not be any aggregation of nominations across various categories. Nominations from multiple individuals at the same firm will be consolidated to form a view from that firm. This is to eliminate any bias in voting. 5

8 Nominations Survey Findings And Data For 2011 Large Cap No. Best Company for Investor Relations - Large Cap 1 AMMB Holdings Berhad 2 Axiata Group Berhad 3 British American Tobacco (Malaysia) Berhad 4 Bumi Armada Berhad 5 CIMB Group Holdings Berhad 6 DiGi.Com Berhad 7 Gamuda Berhad 8 Genting Berhad 9 Hong Leong Bank Berhad 10 Kuala Lumpur Kepong Berhad 11 Malayan Banking Berhad 12 MISC Berhad 13 PETRONAS Chemicals Group Berhad 14 PETRONAS Dagangan Berhad 15 Public Bank Berhad 16 RHB Capital Berhad 17 Sime Darby Berhad 18 Telekom Malaysia Berhad 19 Tenaga Nasional Berhad 20 UMW Holdings Berhad No. Best CEO for IR - Main Board - Large Cap 1 Cheah Tek Kuang, AMMB Holdings Berhad 2 Dato Sri Jamaludin Ibrahim, Axiata Group Berhad 3 Dato Sri Nazir Razak, CIMB Group Holdings Berhad 4 Dato Lee Kok Kwan, CIMB Group Holdings Berhad 5 Tan Sri Lee Oi Hian, Kuala Lumpur Kepong Berhad 6 Dato Sri Abdul Wahid Omar, Malayan Banking Berhad 7 Amir Hamzah Azizan, PETRONAS Dagangan Berhad 8 Kellee Kam Chee Khiong, RHB Capital Berhad 9 Dato Mohd Bakke Salleh, Sime Darby Berhad 10 Dato Sri Che Khalib Bin Mohamad Noh, Tenaga Nasional Berhad 6 Companies and Individuals nominated are polled between 17 October to 16 December 2011

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10 Nominations Survey Findings And Data For 2011 Mid Cap No. Best Company for Investor Relations - Mid Cap 1 AEON Co. (Malaysia) Berhad 2 Affin Holdings Berhad 3 AirAsia Berhad 4 Alliance Financial Group Berhad 5 Ann Joo Resources Berhad 6 DRB-HICOM Berhad 7 Genting Plantations Berhad 8 Hartalega Holdings Berhad 9 IJM Corporation Berhad 10 Kencana Petroleum Berhad 11 KPJ Healthcare Berhad 12 Kulim (Malaysia) Berhad 13 Mah Sing Group Berhad 14 Malaysia Airports Holdings Berhad 15 QL Resources Berhad 16 SP Setia Berhad 17 Sunway Berhad 18 Top Glove Corporation Berhad 19 WCT Berhad No. Best CEO for IR - Main Board - Mid Cap 1 Tan Sri Dato Sri Dr. Tony Fernandes, AirAsia Berhad 2 Sng Seow Wah, Alliance Financial Group Berhad 3 Dato' Lim Hong Thye, Ann Joo Resources Berhad 4 Tan Sri Lim Kok Thay, Genting Plantations Berhad 5 Charles Henry Ireland, Guinness Anchor Berhad 6 Jamaludin bin Md Ali, KFC Holdings (Malaysia) Berhad 7 Anto Joseph, Mudajaya Group Berhad 8 Tan Sri Dato Sri Liew Kee Sin, SP Setia Berhad 8 Companies and Individuals nominated are polled between 17 October to 16 December 2011

11 Survey Findings And Data For 2011 Mid Cap No. Best CFO for IR - Mid Cap 1 Andrew Littledale, AirAsia Berhad 2 Eric Lee, Alliance Financial Group Berhad 3 Tan Wee Kok, Genting Plantations Berhad 4 Edward Chong Sin Kiat, IJM Land Berhad 5 Alan Au, KFC Holdings (Malaysia) Berhad 6 Faizal Mansor, Malaysia Airports Holdings Berhad 7 Kenny Loi Kent Liak, Mudajaya Group Berhad 8 Marc Seiler, Nestle (Malaysia) Berhad 9 Ng Lai Ping, Sunway Berhad 10 Lim Cheong Guan, Top Glove Corporation Berhad No. Best IR Professional - Mid Cap 1 Benyamin Ismail, AirAsia Berhad 2 Wong Chee Seng, Alliance Financial Group Berhad 3 Benjamin Low, Genting Plantations Berhad 4 Shane Guha Thakurta, IJM Corporation Berhad 5 Abdul Rahim Awang, Kencana Petroleum Berhad 6 Norhaizam Binti Mohammad, KPJ Healthcare Berhad 7 Lyanna Tew Hui Si, Mah Sing Group Berhad 8 Vinie Chong Pui Ling, Malaysia Airports Holdings Berhad 9 Aisyatul Aizzura Abdul Rahim, Malaysian Airline System Berhad 10 Zulkifli Mohd Salleh Sabai, Malaysian Resources Corporation Berhad 11 Freddie Yap, QL Resources Berhad 12 Cheong Heng Leong, SP Setia Berhad 13 Wong Sheue Yann, SP Setia Berhad 14 Clement Chen, Sunway Berhad 15 Yap Kang Beng, UOA Development Berhad 16 Ariesza Noor, Wah Seong Corporation Berhad 17 Kenny Wong, WCT Berhad No. Best IR Website - Mid Cap 1 AirAsia Berhad 2 IJM Corporation Berhad 3 Jaya Tiasa Holdings Berhad 4 Kulim (Malaysia) Berhad 5 Mah Sing Group Berhad 6 Malaysia Airports Holdings Berhad 7 SP Setia Berhad 8 Top Glove Corporation Berhad 9 Wah Seong Corporation Berhad Companies and Individuals nominated are polled between 17 October to 16 December

12 Nominations Survey Findings And Data For 2011 Small Cap No. Best Company for Investor Relations - Small Cap 1 Alam Maritim Resources Berhad 2 Axis Real Estate Investment Trust 3 C.I. Holdings Berhad 4 CB Industrial Product Holding Berhad 5 Dayang Enterprise Holdings Berhad 6 Evergreen Fibreboard Berhad 7 Lingui Developments Berhad 8 RGB International Berhad 9 Ta Ann Holdings Berhad 10 TSH Resources Berhad No. Best CEO for IR - Main Board -Small Cap 1 George Stewart LaBrooy, Axis Real Estate Investment Trust 2 Datuk Johari Abdul Ghani, C.I. Holdings Berhad 3 Lim Chai Beng, CB Industrial Product Holding Berhad 4 Kuo Jen Chang, Evergreen Fibreboard Berhad 5 Dato Tan Aik Sim, TSH Resources Berhad No. Best IR Professional - Main Board - Small Cap 1 Soffan Affendi Aminuddin, Alam Maritim Resources Berhad 2 Syed Khalil Bin Syed Ibrahim, C.I. Holdings Berhad 3 Kuo Jen Chiu, Evergreen Fibreboard Berhad 4 Rachael Yap, Lingui Developments Berhad 5 Frederick Tan Aik Yong, TSH Resources Berhad No. Best IR Website - Small Cap 1 Axis Real Estate Investment Trust 2 C.I. Holdings Berhad 3 Evergreen Fibreboard Berhad 4 TSH Resources Berhad 10 Companies and Individuals nominated are polled between 17 October to 16 December 2011

13 Survey Findings And Data For 2011 New Categories In addition to requesting nominations for companies and corporate officers, and IR website we also asked respondents to rate best IR for an IPO, Business Knowledge of IR team, Most Improved Service from IR team, Quality of Annual Reports, and Quality of One-on-One Meetings. No. Best IR for an IPO in Malaysia 1 Bumi Armada Berhad 2 Pavilion Real Estate Investment Trust 3 Sunway Berhad No. Business Knowledge & Insights of IR Team - Malaysia 1 AirAsia Berhad 2 AMMB Holdings Berhad 3 Axis Real Estate Investment Berhad 4 CIMB Group Holdings Berhad 5 DiGi.Com Berhad 6 Gamuda Berhad 7 Genting Plantations Berhad 8 Hong Leong Bank Berhad 9 IJM Corporation Berhad 10 Kuala Lumpur Kepong Berhad 11 Malayan Banking Berhad 12 Malaysia Marine and Heavy Engineering Holdings Berhad 13 PETRONAS Dagangan Berhad 14 PETRONAS Gas Berhad 15 Public Bank Berhad 16 Sime Darby Berhad 17 SP Setia Berhad 18 Tenaga Nasional Berhad 19 Top Glove Corporation Berhad 20 TSH Resources Berhad No. Most Improved Service from IR Team - Malaysia 1 AMMB Holdings Berhad 2 CIMB Group Holdings Berhad 3 Genting Malaysia Berhad 4 Hong Leong Bank Berhad 5 IOI Corporation Berhad 6 Malaysia Airports Holdings Berhad 7 Maxis Berhad 8 Mudajaya Group Berhad 9 Sime Darby Berhad 10 Tenaga Nasional Berhad Companies and Individuals nominated are polled between 17 October to 16 December

14 Survey Findings And Data For 2011 New Categories No. Quality of Annual Reports/Formal Disclosure - Malaysia 1 AMMB Holdings Berhad 2 Axiata Group Berhad 3 Axis Real Estate Investment Trust 4 CIMB Group Holdings Berhad 5 IJM Corporation Berhad 6 IOI Corporation Berhad 7 Kulim (Malaysia) Berhad 8 Malayan Banking Berhad 9 Public Bank Berhad 10 Telekom Malaysia Berhad No. Quality of One-on-One Meetings - Malaysia 1 Alliance Financial Group Berhad 2 AMMB Holdings Berhad 3 CIMB Group Holdings Berhad 4 Gamuda Berhad 5 Hong Leong Bank Berhad 6 IJM Corporation Berhad 7 Kuala Lumpur Kepong Berhad 8 Malaysia Airports Holdings Berhad 9 Public Bank Berhad 10 Tenaga Nasional Berhad 12 Companies and Individuals nominated are polled between 17 October to 16 December 2011

15 Market Chat 2011/2012 Market Highlights In line with Bursa Malaysia s commitment to create a sustainable and diversified investor base, the popular annual Market Chat programme is an integral part of the strategy to reach out to more retail investors. Market Chat 2011/2012, the fifth instalment of our retail strategy targeting 84 roadshows, will make stops in 30 cities throughout Malaysia. The focus of this season is to increase Bursa Malaysia s level of engagement to reach more retail investors specifically in non-traditional markets outside Klang Valley, Penang, Ipoh, Johor Bahru, Kuching, and Kota Kinabalu. Market Chat 2011/ 2012 will continue to follow in its tradition of educating retail investors and creating greater awareness of the products and services available in the securities markets, i.e. Exchange Traded Funds (ETFs), Real Estate Investment Trusts (REITs), Bursa Station, CMDF-Bursa Research Scheme (CBRS), edividend, and warrants. Over the years, the number of Market Chat broker partnerships has increased from three broker partners in 2007 to nine in With the effort and commitment of Bursa Malaysia and its broker partners, Market Chat s retail engagement has increased substantially by 600%. The increase in retail engagement has in turn resulted in an increase in the awareness of internet trading. This is evidenced by its penetration doubling from 3.8% in 2007 to 7.9% in According to one of the broker partners, the value of their online trades has tripled since the inaugural Market Chat in Bursa Malaysia, together with its broker partners, has provided impactful and informative sessions for the retail participants, who in turn have spoken positively about Market Chat. We expect to see greater turnout for the rest of this season. Market Chat 2011/2012 is expected to conclude in May Regulation Advocacy Sessions On Disclosure For Chief Executive Officers And Chief Financial Officers Following the issuance of the Corporate Disclosure Guide and changes to the Listing Requirements last year on enhanced disclosure requirements for financial reporting and annual reports, Bursa Malaysia arranged a series of advocacy sessions on disclosure for Chief Executive Officers and Chief Financial Officers of PLCs. The seventh advocacy session on disclosure was held at Bursa Malaysia on 24 May This is part of Bursa Malaysia s effort to raise awareness on corporate disclosure obligations and to promote high level of disclosure practices among listed issuers. The advocacy sessions will continue throughout 2012 with the aim of engaging all listed companies on Bursa Malaysia. Educational Programme For Dealer Representatives (DRs) As part of our continuous efforts to improve the business conduct of market participants, we continued with our educational programme entitled Key Obligations of DRs Relating to Trading. Bursa Malaysia held three sessions for DRs in Penang, Kuching and Johor Bahru on 25 February, 10 March and 24 March 2012 respectively. The programme was well received with over 120 attendees participating in each session. The programme was accredited by the Securities Industry Development Corporation (SIDC) under its Continuing Professional Education (CPE) scheme with ten CPE points awarded to the participants. Articles in this page are extracted from Bursa Bytes, Issue 1, Volume 4, April

16 Enhance Your IR Strategy With Research Coverage CMDF-Bursa Research Scheme (CBRS) Enhance Your IR With CBRS / Get CBRS Funding for Your Research Coverage and More All companies listed on Bursa Malaysia are eligible to participate in CBRS. A 50% funding by the Capital Market Development Fund (CMDF) provides further incentive for PLCs to participate in the 2 year scheme. Scenario / Reality You are a public-listed company (PLC) with a viable business model, practice good corporate governance, showing solid financial performance and prospects. With research companies typically focusing on covering Bursa Malaysia s top 100 PLCs, competition amongst the remaining 800 PLCs for investor, analyst and media attention is strong. So what s your IR strategy to ensure your company is heard and seen by the stakeholders? Research Coverage as a Communication Channel The availability of research coverage has the potential to bring a greater number of institutional and retail investors in the stock trading of a company. It also allows investors the opportunity to gain access to the management of companies via research analysts. The research reports produced by Investment Advisers licensed under the Capital Market Securities Act (CMSA) 2007 are made available on Bursa Malaysia s website to a wide audience, free of charge. Aside from the research report coverage, eligible participating PLCs are given a higher priority in being profiled in Bursa Malaysia s institutional and retail roadshows such as Invest Malaysia, Market Chat and Malaysia Gems. This in turn increases the visibility of the participating PLCs. By participating in CBRS, PLCs can enhance their exposure to Bursa Malaysia s investment base and provide investors with additional analysis to facilitate their investment decisions. This is especially important in uncertain market conditions. For more information, please visit If the company is familiar to a broader base of potential investors it may be easier to raise new capital and increase liquidity of existing shares. Bursa Malaysia Research Repository The Bursa Malaysia Research Repository aims to foster a more vibrant capital market with greater liquidity for our investors and listed companies. With research reports from the CMDF-Bursa Research Scheme (CBRS) and non-cbrs research reports from the sell side analysts, we intend to help investors make better informed decisions and facilitate better understanding of our listed companies. The CBRS is especially beneficial to a company with lower visibility amongst the analyst community and is seeking to generate further interest in its story. 14

17 GLC Broker Survey Khazanah Nasional Berhad Every year, Khazanah Nasional Berhad s research division polls sell-side analysts to gauge the markets perception of government linked companies (GLCs). This GLC Broker Survey narrows-in on six management and investability metrics, namely that of relative market position, investor communications, EPS guidance and overall investment appeal. Quantitative scores are then given to each GLC based on the sum of analyst feedback. Over the past 4 surveys, there has been a steady improvement in analysts perception of GLCs across most survey metrics. The proportion of GLCs receiving Positive and Neutral scores has improved, while those receiving Negative scores have declined. Key takeaways from this survey include: From laggards to performers: The market s perception of GLCs has improved significantly. More analysts now trust management s strategy and execution capabilities, which in turn enhance GLCs appeal among fund managers. Sentiment explains share price movement: Importantly, the survey provides colour to GLC share price accretion over the past 4 years: the best performing survey companies have tended to be linked with superior share price performance. Positive feedback loop with management: The biggest areas of improvement have been in management execution ability, management strategy and Investor Relations. Analyst feedback is then syndicated with GLC management teams to improve process-flow and for better targeting of analyst expectations. Chart: Percentage of G-20 firms receiving Positive survey feedback +90% +50% +60% +3X PCG. Market position, managing expectations and investment appeal scores are not available for the 2008 survey 15

18 Investment Community News & Views A Message from UK IR Society Michael Mitchell, General Manager, UK Investor Relations Society Michael qualified as a Chartered Accountant in 1974 and worked in the retail and transport sectors. After various line positions in finance he moved into Investor Relations in From 1998 until 2004 he was Director of Corporate Communications with FirstGroup plc, before working on the renewal of the Group s railway franchises. Michael has been a Board member of The Investor Relations Society since early 2005 and became General Manager in January Congratulations to Malaysian Investor Relations Association (MIRA) on your second Malaysia Investor Relations Awards ceremony. We are delighted to be partners with MIRA on the Certificate of Investor Relations (CIR) examination and congratulate your successful candidates on the completion of the exam. Investor Relations (IR) is becoming increasingly recognised around the world as essential for quoted companies and Investor Relations Officers (IROs) are becoming much more professional. In a globalised market for investment, there are many challenges facing issuers and it is important that companies are able to communicate their investment strategy effectively. At our recent annual conference, the key themes that emerged as fundamental for best practice IR in uncertain times were honesty and transparency in communication. What emerged from the day was the importance of IR in enabling companies to meet their objectives and overcome challenges. To be effective, IROs need to be fully on top of their brief. They need to be seen as credible spokespersons for their companies and they need to have the gravitas and personal skills to be able to interact with management at the highest level within their organisation. Technical understanding is a fundamental part of the skill set and I would recommend that all new entrants to the profession undertake the CIR programme. However, IR is an art not a science and there is no substitute for experience to develop the true professional. On behalf of the UK Investor Relations Society, I wish you a successful awards ceremony. 16

19 A Message from IRPAS Joseph Chia, General Manager of Investor Relations Professionals Association (Singapore) The information needs of the ever sophisticated investors in the internet age have never been higher. Investors not only demand timely and comprehensive disclosures (which is more or less a given in these days), they are also demanding more proactive disclosures and engagements, focusing on more effective ways to present complex information in a format easier for them to digest and compare. This trend and the ever increasing Investor Relations (IR) best practices have added unprecedented strain on recourses for IR professionals all over the globe. The challenge is even larger in Asia, where the shortage of qualified IR professionals adds to the problem of meeting capital market s mammoth thirst for professionally presented information. Fortunately, help is at hand. Rising up to the challenge of this increased demand in Asia, there are more IR service providers and training courses available for IR professionals today than ever before. Countries like Japan, Australia, Singapore, Malaysia, India and Hong Kong have successively formed IR Associations and have actively promoted the awareness and benchmark of IR best practices. IR courses are available today not only through these IR Associations but also through stock exchanges and territory institutions, educating not only IR professionals, but also CEOs, CFOs and Directors on IR and the vital role it plays in the capital markets valuation process. Joseph Chia General Manager Investor Relations Professionals Association (Singapore) IR Associations across Asia have come a long way and have introduced many value added initiatives to support the IR industry and the investment community. IRPAS congratulates MIRA, our counterparts across the border, on the successful launch of its second IR Survey and Awards, a vital initiative to benchmark the best IR standards in Asia. 17

20 Investor Relations in the New Normal Era Steve Kelly, Managing Director, Thomson Reuters Extel Steve is one of the foremost authorities on European Investment Industry opinion. His extensive range of contacts throughout the industry enables the Extel business to secure the quality of response which has secured its reputation. He has overseen a 1,000% increase in Survey participation, and the extension of the Survey franchise into associated markets, such as UKSIF/Extel SRI Survey and including a range of bespoke projects for investment and commercial clients. Over the last two decades, starting first in North America, then in Europe, and more recently and vibrantly in Asia, the role of Investor Relations (IR) has become much more influential in how companies communicate with asset managers. We all know this, and of course as IR has become a proper profession, the competition for investment dollars has increased significantly with evermore companies going on roadshows, providing granularity and transparency to investors, and giving real access from executive management to the market. While this professionalism itself has created challenges for IR teams, to better focus what they do, to learn from and apply best practice, and to find new ways to get the corporate story across, the whole landscape for IR is now facing up to the additional, and major, challenge of the new normal world of equity investing that has emerged from the global financial crisis of 2008, and the ongoing repercussions of that crisis. What I mean by new normal is perhaps more a North American and European concern, but it is also a real factor for Asian companies too. In the immediate aftermath of the 2008 crisis, all three sides of the investment community were severely unnerved, and the very future of the capital markets was brought into question. As no one can live in permanent crisis, that passed, and the markets then entered a period of waiting for things to return to normal, with buoyant trading volumes, an active M&A and corporate finance market and a genuine appetite for risk. Well, that just hasn t happened. In the West certainly, with accompanying sluggish economic growth, and worries over financing, from government debt to the Eurozone problems, the investment industry has had to come to terms with the reality that lower returns, lower trading activity and a riskaverse mentality is the general state of affairs. So, such an environment is the new normal. As I say, the dynamism of Asia, and the giant engine of growth that China represents, has meant that Asian companies, and Asian investment markets (excluding Japan), have been less affected by the new normal.but they are far from immune, in today s connected global world. 18

21 For investors, what has been the result of this new sentiment has been really three things. First, a big increase in passive investing, and away from active equity stock picking. Second, a focus on the macro picture, and the dominance of beta over alpha in the investment decision process. And thirdly, has been a reluctance to do much at all. With many asset managers seeing a reduction in funds size for equity funds, and facing pressures on headcount and the resources they can apply to investments, safety first has become an investors mantra. These are trends with real implications, and added challenges, for IR teams. In effect, there are fewer investment dollars out there for companies to attract, and it is much more difficult for IR teams to create and sustain a corporate narrative which will be heard, and understood, by investors who are only looking at overall macro trends. The solution can only be through further increasing professionalism in IR, by really understanding what investors want, and responding directly to that. Asian companies are impacted by all this themselves. To begin with, there are many Western investment firms with large exposure to Asian equities. While these have if anything increased, as the relative attractions of Asian equities over Western companies have become pronounced, the firms themselves are in general facing the issues described above, and are more cagey, and more hesitant in their investment approach. As well, the focus on the macro environment applies to how investors look at Asian stocks too, raising the bar for IR teams in how they can drive through their own company story. will enable IR teams to sharpen their services, and compete effectively for investment dollars. The Extel data makes clear that CEO and CFO one-on-ones remain completely crucial very few active equity investors will make a significant investment decision without having had such a meeting. Perhaps that is little surprise; alongside that however, over 77% of investors now rate access to divisional directors as vital too. They want, and need, to drill deeper into companies, to properly uncover value and understand the dynamics of the business. The Extel data also shows that the buyside place more value on roadshows, with 82% rating these as valuable/ very valuable, as opposed to investor data, where the equivalent number is 51%. At heart, investors prefer companies to visit them, in their own offices, where perhaps several PMNS from the firm can quiz with and meet management, rather than attending a more stage-managed event. And then underlying all this contact and access is the ability of the IR team to be cogent, professional and close to with company strategy. Nearly 90% of investors expect the IR team to help them, with company insights, of course, but more with sector and industry knowledge. They want to get a wider appreciation of the opportunities and challenges a company will face, and to place the stock in the context of the new normal world in which they now operate. However, it presents opportunities too. From many of my discussions over the last year or so with Western investors, the realisation of the ongoing lower level of returns from Western equities has increased interest in Asian stocks, as they are seen as having much more growth potential. Allied to that, Asian investors themselves remain dominated by a focus on Asian stocks, with investments in non-asian companies still a very small percentage of assets under management, and well below the international distribution of assets that we see amongst US and Europe-based investors. To be successful in reaching out to investors, IR teams must strive for relevance and clarity in every part of their IR program. The latest feedback we have collected in our global Thomson Reuters Extel surveys - with views from 15,000 portfolio managers or buyside analysts - gives real insight into what it is the buyside are looking for from companies, which 19

22 Understanding the Shareholder Mind-set Navin Pasricha, Chairman, Columbus Circle Governance Sdn. Bhd. Every company and board needs to understand the thinking and motivations of its shareholders and investors. After all, the shareholders own the company, they are the boss and they can fire you. Whilst it seems obvious that it pays to understand the boss, it is surprising how often no real attempt is made at understanding the mind-set of shareholders. There are a number of underlying reasons for this. Firstly, there is a belief amongst some directors that all the average shareholder wants is an ever increasing share price and a constant dividend stream. That is all the shareholder is interested in. These directors have their heads in the sand and their numbers are reducing fast. Whilst there may well be a number of shareholders and speculators with this attitude, study after study has demonstrated that the serious longer term investor looks beyond the basic issues of immediate dividend and share price. The average retail investor is concerned about not only today s dividends but also about how sustainable those dividends are going to be over the long haul. They are also very concerned about the ethics of the company s business, the quality of governance, its impact on the environment and other social issues. Navin Pasricha Chairman of Columbus Circle Governance Sdn. Bhd. Another, not so obvious reason why some companies do not seriously try to understand shareholder thinking is that, a number of major shareholders in a company are also directors and so it is natural for them to believe that they already understand the shareholder mind-set. This type of thinking is particularly pronounced in companies where a significant chunk of shares are held by members of a founding family. Whilst this thinking is understandable, it is a dangerous premise on which to build strategy and an Investor Relations (IR) programme and can negatively impact the share price. Many family company members find it difficult to fully appreciate that although they control the direction and operations of the company, they actually do not control the share price. The share price is determined when people sell their shares and for the main part, controlling shareholders do not sell their shares. The consequences of not understanding the shareholder mind-set and acting appropriately can be dire. The downside includes a very volatile shareholder base that exits at the first sign of a downturn and a lack of credibility and shareholder support. Ultimately if a company does not wish to understand and communicate with sections of the shareholders, the company will find itself at the receiving end of some very painful shareholder activism. Of course, understanding shareholders is not an easy task. To begin with, they are such a diverse group and include retail investors, institutional investors, government linked agencies, employees, overseas, domestic investors and not to mention a mix of long term and speculative investors. They all have slightly different motivations. The first step is to identify the The consequences of not understanding the shareholder mind-set and acting appropriately can be dire. The downside includes a very volatile shareholder base that exits at the first sign of a downturn and a lack of credibility and shareholder support. 20

23 significant groupings of shareholders in your particular company. Once this is done it becomes possible to devise suitable techniques to communicate with the different groupings, understand them better and act accordingly. This kind of differentiation is essential. The more you can drill down and subcategorise the better. A real example will help to clarify the necessity of categorising. One particular client we assisted had a shareholder newsletter. You may think that this is a good move in itself because it helps the communication process with shareholders. However, in reality, the newsletter was picking up negative feedback. We analysed the feedback, the content of the newsletter and the shareholder base. We found that the content was written in layman s language. The majority shares in this company were held by institutional investors and even within the retail investor segment there were indications of fairly sophisticated investors. There was a clear mismatch between these types of shareholders and the simplistic content and language of the shareholders newsletter. The result was that many newsletters ended up in the bin unopened and if they were opened they caused offence because the readers felt their intelligence was being insulted. So having a communication programme is all well and good, but you need to know who you are communicating with so that communication can be conducted in an effective way that is not going to backfire and to ensure that you are talking about the things that actually matter to your shareholders. What concerns shareholders will of course vary from company to company and this is the next step in understanding the shareholder mind-set. You need to discover the issues that are top of the mind for the different people in the various segments of your shareholder register. Shareholder surveys, and regular shareholder meetings are essential. The media and analysts of course have a large impact on the thinking of shareholders and so it is a valuable exercise to continuously analyse what analysts and the media are saying about your company and your industry. However, this needs to go beyond simply getting a media agency to gather the information and then reading it. Ideally, you should develop in-house quantitative measures of shareholder confidence, shareholder volatility and shareholder satisfaction for each segment of shareholders. These can then be tracked to gauge the impact of various analyst comments and media coverage on shareholder thinking and actions. Columbus Circle Governance Sdn. Bhd. Columbus Circle Governance is a professional services firm with operations in Malaysia, India and Australia. We help our clients in corporate governance, board improvement and training, strategy, risk management, and Investor Relations. Our point of difference from other consulting firms is that our staff members have been leaders in their fields and have actually done it themselves. They are more than consultants, they are experienced practitioners who understand the practical issues and challenges of implementation. We go beyond consulting we always help you to implement. Another publicly available avenue for gathering information about shareholder thinking is to analyse the questions being asked at AGMs by the shareholder groups such as the Minority Shareholder Watchdog Group. A number of countries carry out regular surveys to uncover what is on the mind of shareholders. Whilst such surveys are not commonplace in Malaysia, our firm carries out ongoing consultations with a variety of shareholders in order to gauge what are the important issues. Top of the list at present is the exposure of their companies to European markets given the problems in Greece. This is followed by less topical issues that appear always to be on the list - out of control compensation packages; related party transactions; poor performance; arrogance and non-eco friendly actions. These issues, however, are from generic consultations and the point to take away is that they may be very different from your particular shareholders. So every company really does need to analyse its own shareholder register and simply ask representative shareholders, through survey or face-to-face sessions, in order to understand what is important to their shareholders. Living on assumptions or common wisdom is dangerous. 21

24 Communicating Specifically for Disclosure s Sake. Does it Really Work? Dr. Darren Wong, CEO, Esente Communications (M) Sdn. Bhd. Darren brings to the table a wealth of experience culled from various sectors including banking & finance, e-commerce and marketing. His analytical skills allow him to spot opportunities in every situation and is able to present and market clients unique selling points most effectively. Beyond Disclosure Guidelines Disclosure guidelines are minimal standards that companies must abide by. But that doesn t mean companies should stop there. I have been in the practice long enough to observe how many leaders of corporate Malaysia perceive investor communications. The most popular line that I have heard so far: Who needs an active investor communications programme? The results will speak for themselves. All we need is a basic programme that abides to the disclosure guidelines. Well, yes and no. This mind-set is akin to parents putting food on the table but never bothering to communicate with their children. Sure, your children will grow up fine, but how solid will the foundation of your relationship with your child be? What I m trying to say is, if you don t put effort into building a communicative relationship with your investors, you have no platform. Without a platform, you cannot expect investors to understand your company beyond numbers and net profits. And you can basically forget about getting any buy-ins from investors on unconventional activities or circumstances. Jeff Bezos, CEO of Amazon.com (world s largest online retailer) understands this very well. He proactively shares his ideas and beliefs with his investors. He does it so well that investors continue to support and pour money into the company even when it is experiencing continuous losses for the first few years after its listing on NASDAQ. Fortunately, in this case, the investors belief paid off when the company made US$631million last year. On hindsight, all these would not have been achieved without a well-planned investor communications programme. This more than proves that companies must go beyond the disclosure guidelines. Even good products need promotion What I have come to realise is that many companies have this delusion that when the company shows good results, investors will come on board. For lack of a better example, this perception renders courting Dr. Darren Wong CEO, Esente Communications (M) Sdn. Bhd. Being good is not good enough; companies need to have a conscious effort to promote their companies to investors. It is the responsibility of the company s management to ensure that the true value of the company is fairly reflected to the public and investors. 22

25 investors as synonymous to a contestant courting the attention of the judges and the audience in a beauty pageant. The problem is there are probably 30 contestants in a beauty pageant while there are more than 1,000 companies listed on Bursa Malaysia. In an era of information overload, what do you think are the chances of this good company being discovered even if the company is delivering good results? If being a performing company is enough and any communication and promotion programmes are unnecessary to vie for investors attention, then why are companies spending millions on promoting their great products? Investors want more. Being good is not good enough; companies need to have a conscious effort to promote their companies to investors. It is the responsibility of the company s management to ensure that the true value of the company is fairly reflected to the public and investors. Some of you might ask, I have been actively promoting the company. Why is it that investor following is still lacking? Here s where I lead you to my next point. Is communicating with investors and engaging investors the same thing? So, some of you might have been regularly communicating with your investors but still have weak investor following. Why is that so? For those of you who read literature from corporate Malaysia often enough, you will realise that the style of writing is usually serious and monotonous. It is usually plagued with technical jargons that more often than not, effectively disengages with most readers or investors whom are definitely not financial whizzes. You need to understand that your investors could be anyone from various walks of life, and they are not all from Harvard Business School. Yes, running a public-listed company is definitely a serious matter but it is not against the law to make your content livelier. Not too long ago, a friend shared with me that he enjoys reading the operational review from Berkshire Hathaway Incorporated and how its CEO, financial guru Warren Buffet, communicates with his investors. How true he was and to my amazement, Warren Buffet writes in such simplicity. He is frank and direct in his communication and in his operational review. He casually explains the rationale behind some of the key decisions made over the year in plain English. He freely expresses his excitement on the new ventures taken by the company, the joy when some investments paid off, their newly accepted responsibilities and the disappointments at things that didn t turn out the way he expected them to. I was able to feel the emotions and the passion that Warren Buffet has in his business. It feels very much like a trusted friend speaking to you and you feel safe putting your money in his hands. To me, that s truly an engaging experience. Communicating is getting your message across, while engaging is to make your message heartfelt. Hence, engaging with your investors would most definitely give you an edge in convincing your audience to trust you, and invest with you. To recap, my opinion is that for a company to be successful in attracting investors trust and confidence, there are just a few key things to remember: Rule #1 : Go beyond disclosure guidelines Be commited to building a long-term Rule #2 : relationship Rule #3 : Promote your company Rule #4 : Don t just communicate, ENGAGE! 23

26 Effective Investor Relations and Certificate in Investor Relations (CIR) May Tan Peck Meng CIR, UK trainer and a project coordinator of MIRA Ms. Tan has extensive experience in corporate secretarial matters, Investor Relations and corporate communications. Prior to joining MIRA as a project coordinator and appointed as a CIR, UK trainer, she held senior positions as Group Company Secretary and Head of Investor Relations in publiclisted companies in Malaysia involved in transportation, financial services, and conglomerate with diverse business interests in plantation, property development and investment, automotive and trading services. Have you ever wondered why your company s share rating languishes below that of your peers for an extended period? This may be a sign that you are not effectively communicating the fundamentals of your business to the market, or that there is a perceived problem with your business model. In any case, you need to critically evaluate both your trading position and the way in which you are communicating with the market. Many companies which are listed on the stock markets are disappointed that their shares do not reflect the true value of their enterprise. The reason being that the management have not recognised the need to communicate with and listen to market participants. Many companies do not value the existence of the Investor Relations (IR) role. Some companies perceive it as a cost centre and it is part of the corporate overheads and as such is often regarded as a discretionary cost which can be cut when necessary. As it is not a mandatory requirement to have an IR officer or department, not all companies have them. It is almost impossible to put a cash valuation on the work of IR. This means that it is even more important for Investor Relations Officers (IROs) to communicate effectively with the Board of Directors to ensure that the benefits of an effective IR programme are fully recognised. The aim of the function is the improved understanding of the company among investors and analysts. The communication is two-way with information conveyed from the corporations to investors and vice versa. The feedback received is analysed at the highest level of the organisational hierarchy and is used in decisionmaking and strategic planning. IR is not just to fulfil the requisite corporate governance standards and reporting requirements. It involves building a strong relationship with the investment community, just like the common Chinese business element Guan xi which literally means relationships that cooperate and support one another. This relationship is not simply between companies but also between individuals at a personal level and it is an ongoing process. The senior management team and IRO have to gain trust and loyalty from the market and shareholders. If a company guarantees certain things and delivers as promised, the company is showing trustworthiness and the investment community would be more inclined to remain in contact with them again. In other words, the management s credibility needs to remain intact by effectively communicating with the market and the company s shareholders. It is important to get started on the right foot and to stay there. 24

27 In early 1950s, IR s role was mainly considered as part of public relations functions of communicating to retail shareholders. As financial markets institutionalised, financial audiences expect highly qualified IRO to deliver what is expected. Today, most IRO have backgrounds in finance or accounting. Some of them may lack the experience in understanding the sentiment in engaging with the investment community and the importance of implementing an effective IR programme, thus they fail to achieve the optimum results in their roles as IR officers. This is the reason why some companies seek the middle ground where they prefer to hire someone who has the combined public relations and financial skill-sets to support the sophisticated IR in the current century. Both communication and finance skills-sets are valued equally high for their contributions to IR. Regardless of whatever the approach is, one thing remains certain: effective IR helps in reaching higher stock valuations. This will enable companies to acquire and raise capital more efficiently, two very significant competitive advantages, and this, in itself, keep investors happy. Not many people in Malaysia are aware of the Certificate in Investor Relations (CIR). CIR was first introduced in Malaysia in 2009 by Malaysian Investor Relations Association (MIRA). Many people have no idea exactly how having the certificate may help them in their career and company. The CIR professional qualification is now regarded as an essential prerequisite for those entering the Investor Relations profession in the United Kingdom. MIRA offers the same quality of professional development available in the UK to IR practitioners in Malaysia. The CIR offered in collaboration with the Investor Relations Society, UK s professional body for IR, is highly regarded as a leading authority on IR in UK and Europe (with 80% of companies on FTSE100 on LSE as its members) and among the earliest established professional bodies for IR. In fact, Malaysia is the first country in Asia to offer the CIR. In 2012, the CIR is running in other countries like Russia, Hong Kong and Singapore. So far, in Malaysia, 103 candidates have successfully obtained the CIR certification. The CIR covers topics like Introduction to Investor Relations, Companies and Regulations, Financial Markets Regulatory Environment, Accounting Valuation and Investment Principles. The topics encompass the financial and non-financial aspects of an IR role. Both companies and IR practitioners can benefit from the CIR. The benefits of this professional qualification definitely outweigh the costs. It allows IR practitioners to enhance their IR capabilities and benchmark against international best practices. It allows listed companies to identify qualified IR professionals to strengthen their IR function and have a clear understanding of how to develop an effective IR programme in a company. The CIR is also an opportunity for development for professionals from financial intermediary roles such as investment banking and equity research who want to make the cross-over into listed companies. Please visit for more information on CIR. Investor Relations is not just to fulfil the requisite corporate governance standards and reporting requirements. It involves building a strong relationship with the investment community, just like the common Chinese business element Guan xi which literally means relationships that cooperate and support one another. 25

28 A Snapshot of the Malaysian Code on Corporate Governance 2012 Samantha Tai Yit Chan, Managing Director, Boardroom Corporate Services (KL) Sdn. Bhd. The Securities Commission Malaysia had on 8 July 2011 released the Corporate Governance Blueprint 2011 (CG Blueprint 2011), which places great emphasis on self and market regulation to complement the comprehensive regulatory framework currently in force, and promoting good compliance and corporate governance culture. The Malaysian Code on Corporate Governance 2012 (MCCG 2012) announced on 31 March 2012 is the first deliverable of the CG Blueprint What is Corporate Governance? As defined in the High Level Finance Committee Report 1999, Corporate Governance is: The process and structure used to direct and manage the business and affairs of the company towards enhancing business prosperity and corporate accountability with the ultimate objective of realising longterm shareholder value, whilst taking into account the interests of other stakeholders. Samantha Tai Yit Chan Managing Director Boardroom Corporate Services (KL) Sdn. Bhd. Rewind to the dawn of the 21st Century, The Malaysian Code on Corporate Governance was first issued in March 2000 to solidify our Corporate Governance framework and later revised in 2007 ( The 2007 Code ), with emphasis placed on strengthening the roles and responsibilities of the board of directors, audit committee and the internal audit function. MCCG 2012 superseded The 2007 Code and focuses on strengthening board structure and composition, recognising the roles of directors as active and responsible fiduciaries and company secretaries in corporate governance. The MCCG 2012 sets out 8 principles and 26 corresponding recommendations. The 8 principles are as follows: 1. Establish clear roles and responsibilities of the Board 2. Strengthen composition of the Board 3. Reinforce independence of Directors 4. Foster commitment of Directors 5. Uphold integrity in financial reporting 6. Recognise and manage risks 7. Ensure timely and high quality disclosure of information 8. Strengthen relationship between company and share holders The MCCG 2012 will be effective on 31 December 2012 and observance of MCCG 2012 by companies is voluntary. However, companies listed on Bursa Malaysia are required to report on their compliance with the principles and recommendations of the MCCG 2012 in their annual reports. 26

29 As highlighted in the CG Blueprint 2011, several key recommendations will be implemented through the Bursa Malaysia Listing Requirements while others require changes to the law. Companies are therefore encouraged to make an early transition to the principles and recommendations in MCCG 2012 as history has proven to us, companies which have good Corporate Governance practices are treasured by investors/stakeholders and are more resilient in withstanding financial tsunamis. Boardroom Corporate Services is one of Asia s leading providers of accounting & finance, corporate secretarial, human resource & payroll, internal audit & risk management, share registration and taxation services. With an established network of direct offices and regional partners in Asia Pacific and Europe, we are well-positioned to support your growing business needs in these regions. For more information, please visit us at or contact Mr. Alex Lee at alex.lee@boardroomlimited.com. 27

30 Myriad Worries Weigh On Investor Confidence Insider Asia The rally and buoyant expectations at the start of the year is all but forgotten as renewed worries over the Eurozone debt crisis and health of the global economy took its toll on investor confidence. Fresh jitters in global markets have sent investors scrambling for cover in safe havens such as the US dollar and treasury bonds. As a result, we saw a broad based sell off in almost all classes of risky assets, from equities to commodities. If it were just worries about the global economy, we suspect markets would have stabilised fairly quickly as investors adjust their expectations lower. However, it is now the fear of the unknown that is driving asset prices lower, specifically the uncertainty of how the Eurozone crisis will eventually play out and what is the impact on the rest of the world. In this respect, the outcome of the repeat general election in Greece scheduled for June 17 may offer the clearest clue yet. In the meantime, we expect investors will continue to tread very cautiously. Having said that, we could still see some bargain hunting, especially for fundamentally sound companies, amid bouts of selling. But in view of the heightened risks local investors also have to contend with speculations of an imminent general election it is likely that not many will take up fresh positions or make any big bets, at least until a clearer picture emerges. Who will blink first? Two years after Greece received its first bailout, the country appears no closer to resolving its mounting debt problem, despite pulling off a massive debt restructuring exercise earlier this year. Instead, harsh austerity measures, conditions under the two bailout packages, have fostered widespread backlash that culminated in a crushing setback for the two main parties that supported the programme in the May general election. Neither party managed to cobble together a coalition and a last ditch attempt to form a technocrat government was spurned by the leading leftist, anti-austerity party Syriza. With both pro- and anti-austerity parties neck and neck in polls leading up to the second general election, no one is quite sure of the outcome. But open discussions on the possible Greek exit from European Union (EU) have certainly been getting much louder. Despite the EU, International Monetary Fund and European Central Bank standing their ground on austerity measures agreed under the bailouts, anecdotal evidence suggests that many Greeks do not really believe they will be kicked out of the Eurozone since to do so will result in significant collateral damage to the rest of the member countries. This is certainly the message from Syriza and could potentially be a dangerous myth. Letting Greece off the hook would send a negative signal to the other troubled countries like Portugal, Italy and Spain and create a moral hazard to future fiscal discipline. The game of brinkmanship has already seen widespread withdrawals from Greek banks. There is rising risk that further deterioration in confidence would trigger bank runs in the weaker member countries. Indeed, there were already rumours, since 28

31 denied, of large outflow of funds from Spanish banks. A concerted capital flight would endanger the entire Eurozone banking system. In the best-case scenario, some sort of compromise with Greece will be found and the Eurozone will continue to muddle through, as it had for the past two years. In which case, governments can focus again on efforts to stimulate growth in the global economy. Global economy may not regain momentum until 2013 China most recently hinted that it would consider new stimulus plan to boost the country s flagging economy. This follows various data suggesting the widely anticipated recovery in the current quarter is looking increasingly unlikely. Indeed, growth in 2Q12 may even turn out to be lower than the 8.1% in 1Q12, which was the slowest in nearly three years. A government think tank indicated that growth in the second quarter could fall to just 7.5%. Underscoring concerns of a hard landing, the People s Bank of China, in mid-may, lowered the country s reserve requirement for the third time since December But the impact may be muted if businesses dial back on expansion plans and demand for loans does not pick up. Meanwhile, the US is also struggling to keep its growth momentum afloat. GDP growth slowed to 2.2% on an annualised basis in 1Q12, down from 3% in 4Q11. The creation of new jobs, which is crucial to keep consumers spending and the economic engine chugging along, has fallen well off the pace of late. After averaging at more than 252,000 per month from December 2011 to February 2012, only 269,000 jobs were created in March and April, combined. With a fractious congress led by fiscally tight-minded Republicans and facing a presidential election this year, fresh stimulus measures may be tough to pull off. On a slightly more positive note, the US Federal Reserve has left the possibility of another round of quantitative easing on the table. Having said that, many believe that after two rounds of QE, with the benefits still under debate, the Fed will get much less bang for the buck from QE3. The convergence of sluggish recovery in the US, slowdown in China and emerging economies as well as recession in the Eurozone leaves the world lacking a clear cut engine for growth. Recent summits of world leaders indicate a growing acknowledgement in the need to promote jobs creation and growth rather than just belt-tightening. But so far, there has been little in terms of concrete measures. Meanwhile, the transition of China s economy from one that is export-oriented to domestic consumption driven is progressing too slowly. Even if the Eurozone crisis does not blow up and new stimulus plans are adopted in China, we suspect the global growth will remain lethargic and may not regain momentum until much later this year, or more likely going into

32 Tackling Investor Relations for Small Cap Companies Keow Mei-Lynn, Director of Investor Relations, ZJ Communique ZJ Communique provides Investor and Media Relations Consultancy. It is part of ZJ Advisory, which is involved in Corporate Advisory for the Equity and Debt Capital Markets as well as Equity Research for the Capital Market Development Fund-Bursa Research Scheme (CBRS) GONG! After months of much preparation and eager anticipation, the long-awaited listing day has finally arrived. The hitting of the gong marks a significant milestone and heralds the start of an exciting journey for a public-listed company (PLC). The enthusiastic founders and key management of the PLC look forward to the future, convincing potential and existing shareholders on the PLC s solid business and future plans. Fast forward to two years ahead, and the scene changes. In the area of Investor Relations (IR), most small cap PLCs would have ignored this very important component. Some face certain challenges in trying to communicate with the investors and soon give up. Common grouses echoed by small cap PLCs are:- My market cap is not attractive enough for institutional investors Although the majority of fund managers do prefer to invest in larger PLCs due to issues of liquidity, there are some unit trust funds and insurance funds that are interested to invest in small cap PLCs with good growth potential. Meanwhile, small cap PLCs can also target retail investors. Malaysian retail investors are fairly active, contributing 55% of total trading volume on Bursa Malaysia in April Small cap PLCs can look at targeting retail-focused brokerage firms. These firms are usually non-financial institution backed and have a large base of remisiers with retail investors as clients. When the equity research departments of these brokerage firms initiate coverage on a PLC, the reports are disseminated to their clients nationwide. This significantly enhances the PLC s corporate profile and visibility amongst the retail investors. Let me focus on growing the business. When I deliver earnings, the market will respond Investor perception studies conducted by Rivel Research Group have discovered that the investment community in Europe and US place more emphasis on a company s intangibles such as management credibility and effective business strategy than on earnings or revenue growth. Therefore, it is crucial for PLCs to invest the time and effort in building and enhancing its corporate reputation. 30

33 It is ideal to have a dynamic spokesperson who is able to convey the company s vision and get the buy-in from the investors. Engaging face-to-face with the investment community and business media publications regularly enables a PLC to build relationships and portray a sense of accountability. Furthermore, proactive and honest communication during a crisis situation will enhance credibility. An initiative for small cap companies - MIRA IR Day In advocating good IR practices, Malaysian Investor Relations Association (MIRA) and ZJ Communique, an IR service provider, teamed up to organise the MIRA IR Day, a platform which aims to showcase PLCs with small market capitalisation to the investment community. The purpose of the event was to uncover small cap PLCs with healthy fundamentals. The organisers considered factors such as good financial track record, decent dividend returns and undemanding valuations in selecting the PLCs. The pilot project was launched on 17 April The half-day event featured four PLCs giving an overview of their business and future plans. After the group presentations, question and answer sessions were held at separate rooms. MIRA IR Day, 17 April 2012: (from left) MIRA Executive Director - Ma Kin Hoong, Greenyield Berhad Group Managing Director - Don Tham, ECS ICT Berhad Managing Director - Foo Sen Chin, Kelington Group Berhad Chief Operating Officer Steven Ong, TASCO Berhad Corporate Director Andy Lee, MIRA Director/ Bursa Malaysia Head of Issuer Development Arulnathan Michael Dass and ZJ Communiqué Investor Relations Director Keow Mei- Lynn This enabled the audience to engage in a two-way dialogue with the management teams of the PLCs. The initiative was met with positive response from the investment community. More than 30 sell-side analysts and buy-side fund managers from 14 organisations attended the event. The four PLCs who presented were ECS ICT Berhad, Greenyield Berhad, Kelington Group Berhad and TASCO Berhad. The MIRA IR Day has successfully enhanced the outreach of the participating PLCs, enlarging their network and visibility amongst the investment community. The event has demonstrated the effectiveness of IR as a vehicle for PLCs to reach out to the investment community by narrating their growth stories and future plans. MIRA IR Day, 17 April 2012: Corporate one-on-one small group meeting with the buy and sell-side participants Join Us The MIRA IR Day will be held regularly throughout the year, giving the opportunity for many small cap PLCs to leverage on this platform to reach out to the investment community. If you are interested to be part of this initiative, please call MIRA at

34 The Company Board and Investor Relations Alexander Lo & Owen Howden, Thomson Reuters Alexander Lo, Managing Director of Thomson Reuters Corporate Services Business Unit, is responsible for the Investor Relations and Multimedia Solutions businesses in Asia Pacific. Prior to Thomson Reuters, Mr. Lo was the General Manager of D&B Hong Kong and Taiwan. D&B (NYSE:DNB) is the world s leading source of commercial information and insight on businesses. Surveys show that fewer than half of Investor Relations officers have access to the company s board directors, but over 80 percent of Investor Relations officers provide written reports for board directors. (Capital Markets Board, INVESTOR RELATIONS BEST PRACTICES Interviews With Executives) It is common sense that a company s board is responsible for the supervision or stewardship of the Company for the shareholders. The board s ultimate accountability is towards the owners of the company and the shareholders, while the CEO and its management team are responsible for the company s operations and performance set by the board. In current times of volatile markets, shareholder, director and management expectations may diverge, yet Company s boards rarely communicate directly to shareholders outside of the AGM. Therefore, proactive communication can resolve the difference of opinions and address misconceptions of investors, driving the alignment of shareholder values of a listed company. In many cases, Investor Relations Officers (IROs) are not part of the board, not even reporting to the CEO. 80% of them report to the CFO of a company. Given the function of Investor Relations (IR) is to communicate with a company s investors, how should forward thinking boards communicate and engage with their investors and not just focus on the traditional duties of the Board? Boards are starting to recognise that investor expectations have changed and are developing policies to manage dialogue with investors. Key topics of strategy that should be managed by the board are CEO evaluation and succession, executive compensation, in addition to social and environmental policies. Meeting with major shareholders before AGMs and adjusting shareholder proposals can help alleviate concerns from disgruntled investors. Making the AGM more accessible and webcasting it live on the web will engage investors. An open dialogue is the most effective way to deal with activist shareholders. Shareholder activism has been on the rise because it has been effective. Also, it is becoming more common for shareholders to contact the board directly. Companies need to have a policy to deal with the queries and directors need to be well prepared on likely questions and how they should be answered. Increased communication improves transparency and can strengthen shareholder s understanding on the company s strategies and policies. This can also follow through to media and the broader market. If an IRO is part of a board, he or she will interact with their board on a frequent basis. Quarterly updates and touch on shareholder movements, industry trends, and competitive intelligence. To keep an open dialogue IRO can brief the board on broker reports and investors opinions via perception studies. The investors perception on strategy and valuation is an important insight the board can gather from the IRO. With the market increasingly demanding a higher level of accountability, open communication from the board definitely enhances the value of a listed company. 32