Companies in the Middle East are opening to international investors. Dirk Wagner explains the reasons, the role of stock exchanges and gives tips for IROs in the region.
The aim of investor relations by definition is to transparently and comprehensively provide the financial community with all the information it needs to be able to assess the development of a company’s value.
This kind of comprehensive information policy and an active exchange with stakeholders pay off for companies. As they are the prerequisite in order to create an advantage of trust on the capital market and therefore achieve a promising position in the tough competition for investors and borrowed capital. Increasing the turnover of shares is of major strategic importance to avoid market price fluctuations due to lower turnovers and/or undervaluation. Transparent communication also contributes to those responsible for IR knowing the company’s investors very well, which makes it easier to address them in a targeted way.
Opening up markets
International information and transparency requirements are becoming ever more complex though, which is why investor relations are even more important at companies in the Middle East region. Whereas the market tended to be seen as being rather local years ago, more and more companies are now opening up to international investors. The reasons for this lie mainly in the need for fresh capital. Companies in the Middle East had to see the need to meet international communication standards first of all, but gradually investor relations are gaining a significantly higher profile in the region.
The role of the stock exchanges
But it’s not just companies that are being challenged. Stock exchange operators themselves have the responsibility to create an attractive environment for international investors. Many of them have already realised this. For example, the Qatar Stock Exchange and Iridium Investor Relations have designed a programme for its issuers that will hopefully set a precedent: its IR Excellence Program, which rates the professionalism of investor communication to recognise Best Practice in IR work, honour its implementation and encourage other companies to use this as guidance. The rating shows that above all a high-quality company presentation and the provision of information in digital media are important and they are classified as trustworthy.
Tips for IROs
Access to international distribution networks will also gain importance in future in order to immediately and purposefully reach international media and investors at the same time.
The good thing is: today’s technologies make it possible to quickly and efficiently raise IR to a professional level and therefore achieve success swiftly too. Companies in the Middle East, who want to develop their IR and give transparency higher priority, can therefore achieve their goal in just a few simple steps. Here are my recommendations:
- Think globally and use global transparency standards as your guide: these include a regular news service and an appealing presentation of the company in the media.
- Use modern IR tools: technology will help you to manage the greater challenges and organise your daily IR work processes to be lean and efficient.
- Work together with partners with international experience: they know what the international investors’ requirements are and will help you to avoid typical mistakes when addressing your stakeholders.