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Nov 01, 2022

MEIRA Conference: Capital markets, ESG and IR in the Middle East

Upbeat mood as delegates advised to boost communications with international investors

The Middle East Investor Relations Association (MEIRA) held its annual conference last week and the mood of delegates and speakers was positive, optimistic and ambitious.

This contrasts with the prevailing mood in other global capital markets, where economic and political headwinds have combined to deliver a downbeat sentiment. But the Middle East in general and the Gulf in particular are seeing a confluence of macro trends and developments that make for a bullish outlook.

Mohammed Al Rumaih CEO Saudi Exchange
Mohammed Al Rumaih, Saudi Stock Exchange

The conference itself saw several changes to the standard format, each of which told its own story. First, the event was held in Saudi Arabia for the first time. For a non-Gulf audience, this may not seem of particular significance – until you recall that Saudi Arabia, the world’s largest oil producer, is a G20 economy, home to the world’s most profitable company of all time, and is seeing an exponential rise in liquidity and trading volumes as more international investors come to understand the region’s potential.

Second, the event drew the highest number of registrations and attendees. The hybrid conference was joined virtually or in person by more than 250 delegates, demonstrating the growing adoption of professional IR standards and qualifications in the region. Many participants realize it is no longer good enough to bring financial PR techniques to the Gulf’s listed companies. They are developing – and demanding – more institutional IR standards.

Third, the roster of sponsors was the biggest ever, with global names joining regional sponsors. The 2022 MEIRA conference has rebounded from its Covid-induced absence in no uncertain terms.

Delegates were given some useful insights into current trends and thinking, with

Andrew Tarbuck, chairman of MEIRA, acknowledging the symbolism of holding the conference in the Saudi capital. ‘Saudi is the hottest of the hottest IPO markets in the world,’ he stated, before acknowledging the role played in this success by government, regulators, the exchange and regional associations and partnerships.

In his keynote address, Mohammed Al Rumaih, CEO of Saudi Stock Exchange, listed some of the reasons international capital has been flowing into the Saudi and regional exchanges at the fastest rate ever:

– The Saudi Stock Exchange is now the ninth-largest exchange in the world by market capitalization

– Twenty-four IPOs were successfully executed in the Middle East North Africa region in the first half of 2022, with a full pipeline for the second half and beyond

– The Saudi Stock Exchange saw SAR 174 bn ($46.3 bn) in value traded in the first half, a 34 percent increase over 2021.

MEIRA Conference audienceAl Rumaih also focused on ESG as an imperative in regional markets, saying: ‘Sustainability is not a trend. It is a must-have.’ ESG will only grow in importance in Saudi and the region, he added, pointing out the steps taken by the Saudi Stock Exchange to raise the awareness and standards of ESG reporting.

The View from the Top session comprised an interview with Abdullah Ali Alkhalifa, CEO of Alinma Bank. He was remarkably candid and straightforward in his advice for companies seeking foreign investment capital: get out of the country.

‘International investors don’t know Saudi companies; they don’t know the country,’ he explained. ‘Seen from London and New York, the Middle East is still perceived to be a bit risky. So make yourself available – what they see in financial statements is not enough for them. They need to know about your strategy, your outlook, the quality of your management – only then will they consider buying your shares.’

As well as making an effort to get out and meet international investors, Alkhalifa urged delegates to develop and professionalize their investor relations. ‘Consistency is key, honesty is key – say it as you see it,’ he advised. ‘When you build trust through honesty, the market will believe you. [Good IR is] not just about financials: it is also about strategy, digitization, customer service, the management team.’

MEIRA Conference audienceOther speakers focused on the dramatic changes witnessed in the Saudi economy. While some investors still think about the old Saudi, which was little more than a proxy for the global oil price, the new Saudi is hugely ambitious. Infrastructure is a good example of this: schools, hospitals and utilities are now delivered by the private sector and financed by banks and capital markets.

While banks play a vital role in any economy, the Saudi economy is run entirely differently now compared with only a decade ago. And its ambitious national strategy will only succeed with international finance delivered by capital markets. The role of the banking sector is to support the transformation, but there will have to be more capital markets activity, and speakers all agreed this would intensify over the next few years: equity and debt capital markets will develop rapidly, helped by an active government debt issuance program.

Other sessions covered the more practical approach IR newcomers should take to their first 100 days as a listed company, the views of CEOs on weathering global storms and best practice IR reporting.

In his closing remarks, Tarbuck summed up the role of the investor relations professional in a modern company: ‘The IRO is crucial in defining the company’s brand and, in communicating that with investors, is second only to the CEO.’

Delegates at MEIRA 2022 were left in no doubt: with professional and high-quality IR, the future is bright.

Oliver Schutzmann

Oliver Schutzmann is CEO of Iridium Advisors