Why Meira is looking at KSA and IR in the Middle East ‘through the looking glass’
It is with anticipation and excitement that the Middle East IR Association (Meira), the regional non-profit IR professional body, welcomes the world of IR to our annual conference and awards. It takes place in Riyadh, Kingdom of Saudi Arabia (KSA), for the first time on October 24, 2022.
We have borrowed a title, ‘KSA through the IR looking glass’. Fans of Lewis Carroll will no doubt find their own meaning. Suffice to say, IR must look in the mirror. To understand IR and our roles does sometimes mean passing through the proverbial looking glass into a different world. And why not, is this not how we discover and learn, if not embrace IR opportunities? We can address the Arabic-speaking world through a market lens of size, opportunity and needs in IR.
There are more than 1,000 listed companies from the Arabian Peninsula to North Africa (MENA). Meira currently covers 10 markets from Egypt to Oman. Our membership of 120 companies is, like other IR associations, growing but just a fraction of each local market. KSA boasts a total market capitalization of US $3 tn, making it one of the largest stock markets in the world. Our biggest markets are in international Emerging Market (EM) indices. The regional assets under management exceed US $1 tn having grown 20 percent in 2021. Common to markets in the region, some two thirds of daily trading volume comprise retail investors, albeit the value traded by individuals is less than 10 percent. With regional demographics pointing to a young population, meaning many people are no more than 30 years old, the next generation should surely feature strongly in any developing equity culture.
‘We need more IROs’
To date, our markets happen to be some of the better performing in 2022, the first half of the year seeing record capital-raising of $12 bn on the back of a healthy IPO pipeline. It reminds me of South East Asia at the turn of this century, itself having gone through the emerging markets phase in a big way in the 1990s. This transition needed greater market breadth and depth, including removal of foreign ownership limits, increased free-float and liquidity, the sell-down of state assets through privatization programs and IPOs. This, coupled with innovative product development, served to support investment and risk management through derivatives and stock borrowing and lending, for example. Today, the smallest market in that part of the world is well known for its international multi-asset trading and risk management platform with business from Singapore to Chicago, London, Mumbai, Shanghai and Tokyo!
And what of IR? All investors expect the same standards given they have a choice of where to invest. Encouragingly, our regulators and exchanges see the value of IR. The Gulf (GCC) markets in particular have promoted the need for a dedicated, professional IR role in listed companies. This is increasingly supported by ESG guidelines to address the evolving needs of investors and other stakeholders. Given the quick growth in our Meira markets, notably since the global pandemic, you can argue we need more IROs - not only Arabic-speaking but international IROs. We have 177 certified IROs in the region out of the total of 2,000 Certificate in IR holders. Clearly, for the existing number of listed companies, let alone the IPOs coming our way, we need IR.
What an opportunity and what demand we see in some of the most compelling capital markets in the world, be it looking in the mirror or passing through the Meira looking glass. Bring it on, join us!
John Gollifer is the general manager of Meira