During the break I read a few interesting articles some of which I would like to share with you and give my two cents worth on.

From time to time we see commentaries in the financial papers on whether a certain listed company has made sufficient disclosure or has clarified their corporate action. Let me give a few examples:

There was a commentary that one listed company should better explain why it is cancelling its proposed purchase of a major commercial property resulting in loss of its deposit. At that time there was no clarity as to why a decision which was made mere months beforehand was suddenly reversed.

There was also a comment on the practice by a number of listed companies of announcing that they were considering privatisation. Some companies blamed the market for low valuation yet prefer to keep the stock tighly held.

One listed company went so far as to suggest the offer price of its probable privatization. Some though it was good of the company to suggest a benchmark price which would stabilise the share price while others thought that this was an attempt to cap the cost or test the market and frowned on such ploys.

I will not get into the issues in the examples above but I do want to point out that sufficiency of information and clarity of strategies are what the writers of these commentaries were asking for. They act as intermediaries for the investing public and these comments indicate that sometimes there is a vacuum of information that investors face and they want answers. We hope that listed companies will better manage their disclosure – not just by giving stock responses and buzzword replies, rather by providing clarity of the underlying strategy of the company’s corporate action.

I noticed one interesting practice by a particular airline relating to disclosure. When it rains this airline tells its passengers that they have to exit through the door at the aft of the aircraft. It explains to passengers that it keeps the door at the front closed to avoid sensitive electronic equipment at the front of the aircraft being damaged by seeping water. I thought it was an odd practice and rather quaint that it took the trouble to disclose the rationale for this practice. I suppose they realise that a small inconvenience will be acceptable to the public when it understands the rationale for it. This kind of disclosure helps the public understand the airline and I believe it had gradually led people to accept the company’s practices and business model.

In the same way, listed companies should see the investor as a customer that needs to be retained, and put into practice better clarity of its corporate practices and actions.

I would like to wish all our members a very Happy New Year and most importantly, albeit the challenges, a successful 2009!

Eddie Razak
January 2009