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The Markets October 25, 2011
Companies Worldwide Focusing on SWFs and EMs
An investor relations report from BNY Mellon found companies worldwide are
continuing to expand outreach
to sovereign wealth funds (SWFs) and emerging markets (EMs).
Reported by Tara Cantore
The study, “Global Trends in Investor Relations: A Survey Analysis of IR Practices Worldwide,” also found nearly three out of four respondents believe mechanisms such as short-selling, “dark pools,” and high-frequency trading negatively impact global trading markets and that more oversight is necessary.
Developed as a benchmarking tool for BNY Mellon’s depositary receipt clients, the survey looks at how publicly traded companies are managing their IR practices – from guidance and disclosure policies, to most popular roadshow destinations.
“Companies are adapting to new global market realities and taking a strategic approach to sovereign wealth, as well as growing investor pools from China to India to Brazil, as they seek to better position their firms in higher-growth regions of the world,” said Michael Cole-Fontayn, CEO of BNY Mellon’s Depositary Receipts business. “We see this trend only strengthening and are developing new products that offer greater visibility and access to the global capital markets for forward-thinking firms.”
Key findings from the survey include:
- Fifty-nine percent of all companies meet with sovereign wealth funds (SWFs), up from 47% in 2010, and an additional 25% would consider meeting with them. By a wide margin, the most frequently engaged wealth funds are based in Singapore, Norway, and Abu Dhabi. Western European companies are the most likely to meet (69%) or consider meeting (24%) with SWFs, while North American firms are least likely to engage sovereign wealth funds (42%).
- Forty percent of companies are actively targeting investors in emerging markets, up from 36% last year. Nearly one-in-five are considering a secondary listing outside their home market. Among these firms, a listing in Hong Kong or China is of strongest interest, followed by Brazil and India. Latin America- (70%) and Asia-Pacific-based (54%) companies report the highest interest in attracting emerging market investors.
- Seventy-four percent of all firms believe additional regulatory oversight is needed for trading mechanisms such as “dark pools,” short-selling and high-frequency trading. The sentiment is strongest among U.S. companies (89%) versus non-U.S. firms (70%).
- Sixty-five percent of firms issue corporate social responsibility (CSR) reports, up from 50% a year ago. Nearly twice as many firms in North America (54%) and Asia-Pacific (61%) now do CSR reporting compared to 2010, more in line with companies in Western Europe (84%) and Latin America (68%).
- Ninety-two percent of all companies meet with hedge funds, largely unchanged from 2010; 21% of a firm’s investor meetings are with hedge funds, down from 24% a year ago.
- Eighty-five percent of companies provide financial guidance, especially those in Western Europe (89%) and North America (92%). Seventy-one percent of firms in the BRIC countries offer such guidance, compared to 89% of companies in non-BRIC emerging markets.
- Twenty percent of companies use social media tools to communicate with investors, up from 9% in 2010, but the majority of IR departments remain wary about tools like Twitter and Facebook.