There are big opportunities out there. It’s just a matter of getting on a plane to find them. According to the survey we conducted for this month’s cover story, companies are putting more emphasis than ever on their overseas investor relations.
And with good reason. Aside from the desire to spread their shareholder base as widely as possible or to bring it more closely in line with global revenues, companies have spotted that non-domestic holders tend to be longer-term holders. Perhaps, as DF King’s Frank Stephens suggests, it’s because investors are less knowledgeable about overseas markets. Whatever the reason, the benefits of stability remain.
Our survey reveals that US companies have not seized the overseas opportunity quite as much as their counterparts in other regions. Nothing strange there, of course. When you are sitting in the middle of the widest and deepest capital market in the world, why bother going further afield?
Maybe there are good reasons for US companies to look further afield, though. US investors are slowly increasing the portion of their portfolios dedicated to non-domestic investment. Compare the percentage to just ten years back and you may even describe the move as rapid. And, attracted by the size of the US market, foreign companies are becoming more adept at enticing funds away from the States.
No worries, American IROs may think, we’re still streets ahead. Just look at the Brunswick survey in this issue’s Register section indicating that the IR of many European companies is not up to scratch in the eyes of US investors.
True. But what about the survey’s arguments that European companies are improving their IR in leaps and bounds? Or that more of them are moving toward international accounting standards? Or that US investors are upbeat about the investment opportunities in Europe over the next few years?
Suppose, for one minute, that international accounting standards are accepted by Iosco next year as discussed in our Reporting in Harmony feature. Suppose, that the disclosure playing field between European and US companies does level out. And suppose – a big leap forward is needed here – that a European equity culture does really develop.
Where do all those suppositions leave large US companies which failed to develop their overseas IR? It leaves them with missed opportunities, for one. A second place in the global competition for capital, for another. The complacent may scoff that such big leaps forward require a fervent imagination. Just think back ten years. And then ring up the travel agent.
