SINGAPORE-BASED FUND MANAGERS will pay a premium for companies with good investor relations
89% of respondents say they will pay a quantifiable premium for good IR
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Singapore, 22 June 2009 – A study on Singapore-based fund managers has found that 89% of respondents are willing to pay a quantifiable premium for companies with good Investor Relations (IR). About 66% of respondents are willing to pay a premium of up to 15%, while another 24% are willing to pay a premium of more than 15%. A 15% premium translates into S$75 million for a mid-cap company with a market value of S$500 million. The joint study by Singapore Management University (SMU) and the Investor Relations Professionals Association (Singapore) (IRPAS) is the first such study examining the perception of Singapore-based fund managers about the IR standards in SGX-listed companies.
Institutional investors are important stakeholders of listed companies. And IR is their gateway to a company. “Research has found that a good IR programme can have a positive impact on corporate image, and there is a clear correlation between image and share price,” says Principal Investigator of the study, SMU Associate Professor of Corporate Communication Practice, Dr Mark Chong. “Our findings show that companies can and should invest much more in Investor Relations than they currently do, especially when doing so will result in a better valuation of their stocks,” he explains. The study found that this is particularly true of small- and mid-cap companies, where good IR is more of a challenge given limited resources and experience.
“The results of this study confirm what we have always been advocating – that investors do value good IR, and that when compared to the more developed western markets, Singapore companies still have room for improvement in meeting IR expectations of global fund managers,” says IRPAS General Manager, Joseph Chia. “To help companies understand and improve their IR standards, IRPAS will continue to roll out courses on Investor Relations that are customised for Asian companies,” he adds.
Respondents had also indicated that the quality they valued most was the credibility of the management and IR officers. “This drives home the point that good IR requires a company to build credibility and trust over the long term,” says Chia. “It is not just an ad-hoc activity that a company engages in only when it has good news to share or when it needs to raise funds,” he says.
Based on the study, the IR practices of SGX-listed companies received an “average” rating. The 30 component stocks of the Straits Times Index, however, fared better. Among the large-cap SGX-listed companies, institutional investors rated the following as having the best IR: SingTel, CapitaLand, Singapore Airlines, Keppel Corporation, and DBS Group and StarHub at a joint 5th position. Among the small- and mid-cap companies, the top-rated companies were: Olam International, SingPost, Ascendas REIT, Boustead Singapore and Ezra Holdings.
The study was conducted in April 2009 using an online questionnaire which was sent to fund managers based in Singapore. The findings are based on the responses of 38 fund managers representing 27 institutional investors with estimated equity assets under management in Asia totalling over US$30 billion.
SMU and IRPAS plan to conduct the survey regularly so as to tap the pulse of institutional investors, and gather valuable feedback for listed companies for their IR approach and strategy.
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For media queries, please contact:
Ca-Mie De Souza (Ms)
Assistant Director Office of Corporate Communications
Singapore Management University
DID: 6828 0451 / 9109 1904
Email: camiedesouza@smu.edu.sg
Joseph Chia (Mr)
General Manager
Investor Relations Professionals Association (Singapore)
DID: 6633 3360 / 9756 5303
Email: joseph@irpas.com
About the Singapore Management University
Incorporated on 12 January 2000, Singapore Management University (SMU) aims to groom outstanding business leaders and creative entrepreneurs capable of excelling in a rapidly changing and dynamic world. The University is known to be a pioneer for its interactive pedagogy of seminar-style teaching in small class sizes which remains its unique hallmark. Today, SMU is home to more than 6,000 students and comprises six schools: Lee Kong Chian School of Business, School of Accountancy, School of Economics, School of Social Sciences, School of Information Systems and School of Law. SMU offers bachelor’s, master’s and Ph.D. degree programmes in business and management-related areas, ranging from Accountancy, Economics, Finance, Wealth Management, Law, Information Systems and Social Sciences. It also has a dedicated Office of Research, a number of institutes and centres of excellence, and provides public and customised programmes for working professionals through Executive Education. Collaborations with leading institutions, including The Wharton School, Carnegie Mellon, the University of Pennsylvania and the University of Chicago, allow SMU to draw on academic and research strengths across all major disciplines. The SMU campus is a state-of-the-art facility located right in the heart of Singapore's civic and business district. www.smu.edu.sg
About the Investor Relations Professionals Association (Singapore)
The Investor Relations Professionals Association (Singapore), or IRPAS, is an association set up in 2006 by leading investor relations (IR) practitioners with the primary objective of promoting awareness of, and best practices in IR. IRPAS is run by IR Officers (IROs) for IROs and strives to help all IR professionals to improve their IR through education, training and social networking events. In 2009, IRPAS embarked on a new programme, the IRPAS Seminar Series, in which IRPAS plans to organise IR training seminars that are tailored to the Asian market. In addition, IRPAS also facilitates the sharing of IR knowledge and best practices by working with prestigious institutions and partners to provide research and information for its members. For more information on IRPAS activities and membership details, please go to www.irpas.com.
