Four things we learned at the IR Magazine Forum – Greater China 2019
Coming to Hong Kong in December for the IR Magazine Forum – Greater China 2019 proved interesting. The city was in the middle of several months’ worth of civil protests but its capital markets have continued unimpeded since.
The attitude of the 100-plus IROs who gathered that morning to discuss best practices and to network was one of business as usual, however. Recent macroeconomic pressures in the region, and a projected growth slowdown in mainland China, meant the job of communicating clearly with the market had been of particular importance over the previous 12 months.
Throughout the day’s discussions, there were four strands of conversation that seemed to be particularly relevant going into 2020.
Strong ties to the C-suite are crucial for avoiding crises
IR has always required close ties to the C-suite in order to work well, but a case study perfectly illustrated why a strong relationship can be crucial in order to successfully navigate a tricky situation. Suki Wong, investor relations director at ANTA Sports, revealed how the manufacturing firm was the recipient of several activist investor reports as well as a presentation with some suggestions on how to improve the firm’s corporate governance within the space of a few months.
Though ANTA’s share price took several hits from these developments, Wong oversaw a quick response that included a clarification announcement, which helped assuage shareholders’ fears, and the timely release of quarterly operational figures and a positive profit alert.
Remarkably, Wong co-ordinated most of these actions remotely, either while outside of the office or – in some instances – out of the country on non-deal roadshows, which she duly had to cancel. Key to being able to do this was collaborating with her team and getting quick responses from her C-suite, often within 10 seconds.
‘Keep investing in your IR efforts, particularly when you’re speaking to senior management,’ was Wong’s advice. It meant that when crunch time arrived, the C-suite understood that ‘it was not just about share price, but also the company’s reputation and integrity and the C-suite’s credibility,’ she added. Thanks to this series of timely responses, a major crisis was averted.
Activists are on the rise in Greater China – and ESG is their focus
The trend of investors taking a careful look at a company’s ESG disclosure is certainly on the rise, a panel of sustainability experts agreed, but many are looking for a deeper link between data disclosed and wider corporate strategy.
Gabriel Wilson-Otto, head of stewardship for Asia Pacific at BNP Paribas Asset Management pointed to an increasing incidence of shareholder activism in the region, now on a par with levels recorded in the US in 2010 in terms of the number of activists and campaigns targeting firms.
‘It’s fascinating, as people said the trend would not happen in Asia, but investors clearly care about these issues,’ said Wilson-Otto, who added that investors are often looking for ‘value alignment’ with a potential investee company.
Hendrik Rosenthal, director of group sustainability at CLP Group, said companies need to be on top of this and take care to link ESG data to a company’s overall impact. ‘If you haven’t planned for this or even made your board aware of these issues, I would argue that you’re not very forward thinking,’ he added, advising the audience to consider the KPIs or metrics that may be required by stock exchanges.
Events require preparation, but feedback is key
It has been proven time and time again that the success of IR events hinges on how well you can communicate your company’s narrative with investors. For Venus Zhao, general manager of capital markets and corporate communications at Sinic Holdings, it’s about having a ‘very crafted story’ before you even see investors. Her three-part approach includes an appreciation of recent developments at the firm, thorough communication with management and a catch-up with analysts if your upcoming event is organized by brokers.
Most important of all, however, is to follow up after events, said Zhao – because, if ignored, investors may forget about your company in short order.
Another crucial strand is prepping management well, said Chang Rui Hua, group managing director of capital markets and investor relations at ESR. She takes in public views on a weekly or monthly basis and feeds it back to management. She also coaches managers on each investor they meet with a quick five-minute primer so they can form a good impression.
It serves two purposes: it helps her management ‘sound smart’ and well drilled, and gives her C-suite an honest perspective on how it and the firm are perceived. A lot of management [teams] are appreciative of knowing what the market really thinks about them,’ Chang explained.
Social media has more of an impact than you may think
One of the day’s most intriguing panels saw two IROs with recent digital overhauls under their belts discuss how technology had impacted their messaging. Emily Lau, general manager of investor relations at Pacific Basin Shipping, shared research that showed 80 percent of institutional investors are now using social media – so it’s crucial to be on top of your firm’s output. ‘Investors will think differently if they see something different on social media: it will affect their position, so it’s very important,’ Lau said.
Her strategy at Pacific Basin is to keep various social media accounts that cater for different audiences: Facebook for the firm’s crew and family members, WeChat for Chinese customers and investors or LinkedIn for industry-related friends and brokers. Facebook, in particular, has proven a valuable outlet after Lau oversaw a change from simply posting announcements to posting content more suited to the platform: a series of photos and videos exploring the different cargo shipped by the firm for some did you know? stories, linking to customers’ daily lives.
‘You have to know about the target market,’ Lau said of how to focus social media content. ‘Have a powerful, strategic plan so you can reinforce your corporate message. Then you can deliver it clearly and at a much lower cost.’