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Spotlight on IR Middle East

 

Regulatory developments are helping to push forward IR in a market where transparency is lacking 

The Middle East is a large and diverse region where the true benefits of IR are only just beginning to be realized after its fairly recent introduction around 10 years ago. This relative infancy has led to many companies struggling to differentiate between IR and PR, a habit that is hard to break when Middle Eastern PR advisers still call for companies to be as polished as possible. 

‘As IR professionals we need to inform ‒ not promote ‒ and enable judgement rather than influence it,’ comments Oliver Schutzmann, CEO of Iridium Investor Relations. ‘We need to explain risks, not hide them. The concept of transparently communicating good and bad results can be difficult for the Middle East to grasp.’ 

The shareholder market is also different in the Middle East, as Clémence Piot, general manager of the Middle East Investor Relations Society (MEIRS), explains: ‘Shareholders tend to be sovereign wealth or private banking funds on behalf of families or individuals and this investment base can be tricky to engage with. IROs need to be really proactive in positively communicating results. Small changes – such as targeting brokers and ensuring the simultaneous release of communications in both English and Arabic – are really crucial to success here.’ 

When it comes to IR activities, the overwhelming majority focuses on the US, the UK and Asia; there are very few investor conferences in the Middle East, and most are concentrated in the Emirate of Dubai. Instead, Middle Eastern companies tend to visit international roadshows and attend international investor conferences, many consisting of one-to-one meetings. Locally, investor days and site visits to the Middle East are also commonplace: many companies operate in the oil and construction sectors, so there is plenty of activity for shareholders and investors to see. 

Recent examples of IR development include: 

  • New 2016 regulation requiring all companies listed on UAE exchanges to establish and develop an IR function 
  • A rigorous enforcement approach being taken by Saudi Arabia, with regular public announcements of fines for non-compliant companies 
  • A commitment from the Qatar Stock Exchange to developing an exchange-wide IR excellence program, highlighting achieving companies (and, by default, those that fall short) 
  • The initiation of a graduate program by the Dubai Financial Market and MEIRS, with the support of local IROs, designed to encourage local talent. Graduates are trained within the Dubai markets and placed with local companies to develop their skills. 

‘There are two emerging trends we foresee becoming more commonplace for IR in the Middle East,’ predicts Piot. ‘Firstly, as IR continues to develop, we expect to see the region hosting more of its own events. Secondly, the use of technology, such as IR networking platforms integrating videoconferencing, looks set to grow. This will change the way IR is carried out and will be a fundamental improvement tool, especially for regular meetings.’ 

‘The best thing about IR in the Middle East is that once companies embrace the concept, they want to do it immediately, and do it properly,’ Schutzmann concludes. ‘It really is a fantastic region in which to encourage excellence.’ 

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