The start of formal training about the field of Investor Relations (IR) is yet another initiative of SAFE. Its purpose is to encourage and guide the listed companies to serve the fundamental informational needs of their investors by regularly communicating all developments taking place in their companies.
Being a representative organisation of the regional stock exchanges, SAFE considers that the awareness about the role of IR would create a sense of responsiveness to the investors by the listed companies, which in turn would serve the objective of better and enhanced investor protection in our markets. SAFE also believes that through the well designed IR functions, the listed companies would not only be able to achieve a fair amount of liquidity of their common stock but would also aim to attain some appropriate valuation in the marketplace.
Hence, SAFE has worked hard to conceive and launch this initial series of familiarisation workshops regarding the role and the benefits of the IR which are planned be held periodically in different cities of Pakistan. Today, the field of IR has become an essential element for every top listed company as it serves as an important business support function which enhances the credibility of a company and enables them to attract new investors. Globally, all listed companies are mandatorily required to maintain separate IR departments which perform as the pivotal link between their companies and the outside stakeholders. Some of the well-known companies also follow comprehensive IR strategies and actively engage with investors for business growth and sustainability. Through the process of IR, the listed companies regularly inform their shareholders, the market participants, and their potential investors about the core competencies, competitive advantages, strengths, weaknesses, strategies, and the management leadership potential of their companies.
Unlike the global emphasis, the South Asian capital markets or for that matter the Pakistani market neither give any importance to the IR nor do the listed companies consider these activities as an essential component of their corporate strategy. It is because of many reasons - the chief being that our domestic exchanges themselves do not lay down any requirement for a separate IR function within the listed companies.
On the other hand, the listed companies also consider such a function as a mere cost item than a useful value creation activity. In order to change this situation, it is important for the Exchanges to recognise that getting a company listed on an Exchange is not a destination but rather a first step in a long relationship between a company and our markets where we need to continuously invest to maintain the interest of our investors in our markets. Likewise, the companies also need to understand that an active engagement with the investors, analysts and media could translate into higher understanding of their business, their directions and the potential valuation of their stocks. Hence, it is in the long term interest of both the exchanges and the companies to promote and popularise the role of IR beyond the moment of listing.
It is in the above backdrop that SAFE reckons that educating the listed companies about the virtues of the IR is the first mandatory step to sensitise our listed companies and change their mindset about how to serve the needs of the investors so as to gain a broader investors following. Accordingly, while the upcoming series of seminars may only familiarise the listed companies with the role and the process of IR, however going forward SAFE intends to launch a separate "Manual on Investor Relations" to provide best guidelines and insights on policies, processes and best practices of the IR activities to be followed by the listed companies. Similarly in order to encourage companies to position themselves as leaders in the field of IR, SAFE would also launch an annual event and honour the best practices under the banner of "SAFE Investor Relations Awards."
In the long run, the objective of our Federation is to have at least one qualified IR officer in our listed companies who could regularly undertake the IR related tasks. For this purpose, SAFE would not only introduce specialised IR advisory services but would also encourage the establishment of an "Investor Relations Association" so as to elevate the understanding and practice of Investor Relations as a key discipline in business strategy and communications.
SAFE believes that together with our focus on expanding the "financial literacy" in Pakistan, the initiative of Investor Relations would ensure that our markets remain fairly liquid, transparent and safe for our investors.