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Systemic risk tops market confidence issues

Dubai, February 11, 2014

Systemic market and political risk, followed by the uncertainty of new financial regulation, are the top issues impacting global market confidence, according to a recent report.

The latest annual investor relations (IR) survey conducted by BNY Mellon, a global leader in investment management and investment services, said that roughly three out of four of the respondents rated systemic risk, political risk and levels of government regulation as important issues affecting marketing confidence.

Middle Eastern companies pointed to an uncertain regulatory environment as their chief worry, while the Eurozone issues are no longer the top concern for companies globally, which it remains a concern for firms based in Western Europe, followed by political risk.

The importance of expanding shareholder bases internationally remains a key priority for companies in the Middle East with 53 per cent, while 45 per cent globally reported this among their prime goals, up from just 17 per cent in 2010.

The Global Trends in Investor Relations survey also looked at how publicly traded companies are managing their IR practices and the issues affecting them, with nearly 700 respondents across 63 countries that span the range of market cap and industry sectors, including financials, industrials, consumer, technology and healthcare.

Peter Gotke, managing director, of UK, Ireland and Middle East at BNY Mellon’s Depositary Receipts business, said: “Global markets are showing resilience, albeit with significant differentiation between regions. Looking ahead, investors continue to be wary about the effects of systemic risk, politics and regulation on the world’s markets and how they’ll perform.

“In response to these challenges, we’re seeing more firms seeking to boost their international shareholders and diversify their investor base. Depositary receipts remain a crucial tool for companies in both traditional and emerging markets to source new pools of capital.”

About 34 per cent of Middle Eastern companies saw a jump in active investors in 2013, which globally 36 per cent of the companies reported a rise as compared to 26 per cent the previous year, said the report.

The top 10 sovereign wealth funds (SWFs) engaged with by companies included the Abu Dhabi Investment Authority (23 per cent), Kuwait Investment Authority (14 per cent), Abu Dhabi Investment Council (11 per cent) and Qatar Investment Authority (six per cent), it said.

Only 27 per cent of companies overall used social media to engage investors, with Western European firms being the most advanced in this area, with 45 per cent using social media.

About 25 per cent firms in the Middle East believed the sell-side should be compensated for providing investors with access to senior management, while those in favour of compensation was 36 per cent in North America and 29 per cent in Western Europe.

The companies with data breach communications policy in place in the Middle East were 31 per cent, while globally it has increased from 31 to 52 per cent in the last four years, said the report.

Companies are using more qualitative over quantitative metrics to evaluate IR performance, such as informal feedback from the investment community and the quality of information in analyst reports, it said.

Guy Gresham, head of the Global IR Advisory team, said: “The imperative for companies to maintain an active, engaged investor relations programme has never been greater. Our IR specialists continue to work closely with clients in all regions to support and maximise their outreach when targeting new investor communities.” - TradeArabia News Service




Tags: Middle East | regulation | market | Risk | BNY Mellon |

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