22 July 2008

Talk to your investors, listed firms told

By Sharen Kaur

LISTED firms that want to be heard in times of uncertainty should step up investor communications, said the chief of Malaysia's investor relations (IR) association.

While companies cut back on cost, it is crucial that they invest in IR, not only when there are major successes but also during trying times, said Eddie Razak, chief executive officer (CEO) of Malaysian Investor Relations Association Bhd (MIRA).

"We find that some companies are suddenly conspicuously silent and reluctant to talk to investors when results are not so good," he said in an interview with Business Times recently.

Companies should be transparent and adhere to their IR calendars. These are timetables of when management would brief investors, analysts and even the media.

Companies typically hold briefings once every three months, after releasing their quarterly financial results.

Eddie said companies should give quality information such as business strategies, history of successful execution of strategies, management credibility and challenges in the market.

"Such forward-looking information, provided it is within a safe harbour, allows them to make informed advisory that can help investors make well thought-out investment decisions," said Eddie.

Companies could use IR to help sandbag their share prices against the tide of weak market sentiment.

"At the moment, there are some stocks trading at unreasonably low valuations. It's quite unrealistic that these companies cannot weather the storm," he said.

Malaysia's stock market has fallen 23.64 per cent so far this year on worries of a slowing economy and political uncertainties.

This is worse than regional peers like Singapore that has fallen 15.77 per cent, Thailand (19.90 per cent), Indonesia (20.06 per cent) and Hong Kong (18.98 per cent).

MIRA, which has 220 members, was set up in June 2007 by Bursa Malaysia to promote the practice of IR among local listed companies.

Its start-up fund for the first two years is RM2 million, funded by the Capital Market Development Fund under the Securities Commission.

MIRA offers IR incentive programmes, investor expo, and certificate in IR, among others.

This article appeared in Business Times on 22 July 2008.

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