Philippine Stock Exchange promotes investor relations best practice

The Philippine Stock Exchange (PSE) will collaborate with technology firm Thomson Reuters on promoting investor-relations (IR) best practices among its listed firms. The agreement will see the exchange promoting the vendor’s IR solutions to public companies.

The organisations will work together to provide instructional and marketing tips on how to develop effective IR management programmes.

The PSE hopes the partnership, signed this week, will help attract more foreign capital to the Philippines. One way of doing so is by improving investor exposure for the smaller listed companies, says Enrico Trinidad, vice president of capital markets development at the PSE in Manila.

The exchange has 250 listed companies and, out of that 250, only a handful have research coverage by the big investment banks, he tells AsianInvestor. These include the larger business groups, such as Ayala, San Miguel and so on.

“But there are good stand-alone companies not part of a bigger group that are pretty well managed but don’t have the exposure,” he adds. “They are not part of the index, mainly because of their smaller market cap, so they’re not that visible.”

Trinidad says the agreement is for 12 months, and he says: “I think it would be safe to say we should see some benefits within six months.”

The PSE has used Thomson Reuters to provide webcast solutions in the past, and is thus expanding its work with the vendor.

“We talked to the head of Thomson Reuters in the Philippines, who gave us a rundown of what Thomson Reuters are doing as regards IR best practice,” says Trinidad. “We felt that what they’re promoting can provide more transparency and visibility [of listed companies for investors], and that this will help us as regulators. Because we’re for good governance and full disclosure.”

He adds that the agreement is not likely to lead to tighter rules and does not indicate that listed companies are falling short in terms of governance or IR standards. Nor does it mean that the PSE is dependent on a third party such as Thomson Reuters, he says.

It is simply that the vendor can provide a benefit in terms of its global distribution network for IR webcasts and related solutions, says Trinidad. This is all offered on an optional basis for listed-company regulators, and the partnership involves no fees paid by either the PSE or Thomson Reuters.

There hasn’t been any feedback from investors as yet, given how recently the agreement was signed, adds Trinidad, and it’s hard to quantify the benefits yet in respect of share prices and so on.

Eric Frank, global head of investment and advisory at Thomson Reuters, says: “We focus on education, best practice, how global investors want to be communicated to, use of newer mechanisms to get messages out, how people use IR websites, determining how investors are a good fit for a company’s shareholder base, and so on.”

These practices are less developed in Asia, says Frank, as companies are not so used to competing for capital, so disclosure hasn’t been at the forefront of chief executives’ agendas. They’ve been spending more time on building businesses, for example.

It’s the same story for exchanges in the region, which now need to demonstrate that by listing with them, companies can improve their valuation, disclosure, attractiveness to investors and so on, he adds.

Thomson Reuters is working on putting in place agreements of this type with several other exchanges in Asia. Frank says he would be pleased if it had two or three formalised by the end of the year, although he admits that’s a fairly ambitious target.

The vendor already has similar partnerships in place with NYSE, the Toronto Stock Exchange and several in the Middle East.

The agreements in North America are commercial in nature, says Frank, while those in Asia and emerging markets are more of “an investment in education”.