It was while asleep on the back seat of a bus that I learned the uncomfortable truth about the reintegration of post-communist Europe. Cast your minds back to 1992 and I, young and penniless, was foolishly embarking on a 28-hour bus journey from Northern England to Poland, opting for the marathon road trip rather than forking out the currency required for the three hour flight. I had finally managed to beat the endless noise of the engine and drift off to sleep, but soon I was woken, not by the sunrise or border guards, rather the bus passing from the smooth autobahn to bumpy highways which last saw roadworks during the Third Reich. We had crossed the invisible border from what used to be West Germany into the East.
For many in eastern and central Europe, the road since the Berlin Wall crumbled in 1989 has proved just as bumpy. You thought your job was hard? Spare a thought for IR professionals located in the former communist bloc countries. Not only is often the main focus of their attention in London, but as this month’s cover story shows, they also face difficult headaches over issues like governance, shareholder rights and dormant local markets. The economies of the region may be gaining strength, but these IR pioneers have to deal with negative pre-conceptions from international investors who have already had their fingers burned in places like Russia.
The established western powers did not develop into economic powerhouses overnight. But the global markets are no respecters of history and companies in emerging Europe have been asked to perform painful transformations with almost obscene haste. IR in the region is also playing catch-up – in order to reach investors in London and New York, many former bloc companies realized early on that you have to play by the rules set in west – itself an increasingly uncertain investing environment.
Evidence of this was at a recent awards ceremony hosted in the City of London. The lively MC asked the assembled analysts and institutional investors to vote how they thought the FTSE-100 index of leading UK shares would fare in the coming year. The result? The four possible answers polled an even split of the vote. Nobody, not even the cream of the UK investment community, has any idea where the markets are heading. This uncertainty does not just affect UK IROs – as the largest global center for international equities, IROs from Warsaw to Wellington should take note.
Life for IROs is tough enough at present. Volatility, the global slowdown and a flurry of earnings warnings are combining to make the markets uncertain. So let’s hear it for the IR pioneers of emerging Europe. Saddled with fragile local economies and distant international investors who trade their shares on a directionless market, their challenges are greater.
