Sars, the 2003 flu-like epidemic that began in Hong Kong before spreading rapidly to Singapore, much of the rest of Asia and Canada, infected a staggering 8,098 people, killing 774 of them. Medics say it may return but, for now at least, there is a respite from its devastating effect on individuals and businesses alike. For those afflicted, any talk of silver linings would be in bad taste. But for the corporate world, Sars – like most crises – did offer a chance for the exceptionally open and transparent companies of the region to show just what their IR was made of. Sars hit some companies so badly that had their investor relations been anything but outstanding, their very existence might have been threatened.
Certainly, the IR magazine-commissioned study of investor relations in Asia* provided convincing evidence of the world-class level of investor relations at the best Asian companies. But from the broader perspective, it also suggested a maturing of IR as a whole. Compared with the ten other similar research studies commissioned by this magazine for our global awards, the Asia report was distinctive for the absence of correlation between corporate performance and corporate IR performance.
Too often, the investment community has difficulty making this distinction, finding it hard to praise companies that have failed to provide a good return on investment. Yet in Asia the top two firms in the running for the grand prix for best overall investor relations were probably the two worst-affected companies in terms of performance: Cathay Pacific in pole position (50 points) and Singapore Airlines just behind (46). Perhaps less surprisingly, these two were also voted best for crisis management, although Cathay Pacific was well ahead, taking the award with 118 points against Singapore Airlines’ 49.
As one analyst said of Cathay, ‘It provided the clearest assessment of the situation of all the affected airlines. The chairman was giving statements to analysts for every step taken… [It] didn’t try to hide the negative aspects.’
The airline industry has hardly been the darling of stock markets of late. An easy place to burn cash at the best of times, since 9/11 we’ve seen the failure of several big names and the virtual bankruptcy of others. Even so, few airlines have faced the difficulties of those in Asia where, just as they began to pull away from the consequences of 9/11, Sars arrived to keep everyone either grounded or at least avoiding touching down in Hong Kong or Singapore.
Continued improvement
Credit then to these two Asian high-fliers. They exemplify the best of IR in Asia, as do their domestic markets overall. The 500-odd respondents to the survey were clear in their views of IR prowess by country: Hong Kong companies’ IR was ranked best by 28 percent of them, Singapore’s by 23 percent. No other country in the region got above 5 percent. But there’s certainly no reason for despair about IR elsewhere in Asia as respondents were adamant that it was improving everywhere. An overwhelming 87 percent of respondents saw improvement, and all Asian countries were seen to have improved by 80 percent or more of respondents, with the sole exception of Indonesia (64 percent). Malaysian companies should be proud that a full 100 percent of respondents answering this question in respect of them said their IR had improved.
So has adversity – Sars, the bear market, terrorism – been to some extent responsible for this widespread perceived upturn in IR prowess? It’s possible. Respondents were asked specifically whether the hard times had brought out the best in IROs – or sent them diving for cover. The answers were mixed but more thought things had improved than deteriorated. ‘Companies are much more receptive and willing to cooperate,’ said one respondent. ‘But Sars did affect the number of meetings, and travel was virtually non-existent.’ Many noted the continuing improvement dating all the way back to the Asian crisis of 1997, as in this comment: ‘In general companies have better quality management now and when that happens they are not afraid to report bad news.’
Complaints still abound, and there’s still room for improvement. But this year’s survey, on balance, showed more perceived improvement, more satisfaction with levels of disclosure and transparency, and more praise for companies’ speed and openness of communication with the investment community than either of the previous two.
