Cross Border blogs

Russian remedy

‘I think he should get well as soon as possible. Otherwise we will have to send him a doctor and clean up all the problems.’ Vladimir Putin’s stinging diagnosis was directed at Igor Zyuzin, the billionaire owner of Russian steel giant Mechel, for turning down a summons from the government due to sickness.

The Russian prime minister made sure the media was fully aware that Mechel would be held to account for allegations of price-fixing, tax dodging and selling products more cheaply abroad than domestically. The message was unmistakable and shareholders took note - in their droves.

The reasoning behind Putin’s radical approach, which prompted plummeting stock prices on the RTS index, has been the source of much debate.  What is clear, however, is that foreign investor sentiment is changing with regards to Russia.

Earlier this year, Russia came out very favorably in the minds of 500 investors and analysts who were canvassed IR magazine’s Investor Perception Study, Continental Europe, 2008/2009. This was primarily due to the country’s scant exposure to the credit crunch, for the simple reason it had has very little credit.

Compounding the Mechel saga, fears over ongoing events in Georgia have left Russian companies licking their wounds as foreign investors want out. Russian daily Kommersant says Western investors are ‘losing their common sense when assessing the current situation on the Russian market’ and for being influenced by negative rhetoric in the media.

The ongoing rift between BP and major shareholders in its joint venture TNK-BP has done little to ease public opinion. An insider at BP informed IR magazine he found Russians adopted a more combative approach to negotiations than most other countries. He made this comment in reference to recent events in Georgia, where the group has a major oil and gas line linking Azerbaijan to Turkey and the Med.

Despite TNK-BP’s CEO Robert Dudley recently having his visa suspended, the source remains confident both parties will come to an agreement. But he adds ominously; ‘It is made more difficult when our partners are able to use government offices and officials in Russia to their own advantage against us.’ 

Declining oil production and renewed fears of speculators targeting the Russian market are fuelling the need for Russian IROs to up their efforts. There couldn’t be more timely an occasion for the IR magazine Russia & CIS conference and awards, which take place in Moscow on 23 October.

Fay Sanders
International editor
IR magazine

Stay awake online

A recent survey published by the SEC reveals that over half of retail investors with internet access use the web to make investment decisions.

This is bad news for companies such as Comcast, a leading US cable provider. If a potential investor types the company’s name into Google, up will pop, on the first page of results, a YouTube video of a Comcast employee caught taking a nap on the job.

While big shareholders have bigger things to worry about, retail investors are likely to take such anecdotal evidence into account when deciding where to stash their savings.

One private shareholder I know likes to visit the high street stores of retailers he might invest in, to get a feel for customer demand and how the businesses are run. If he found an employee crashed out at a counter, he would think twice about buying that company’s shares.

But companies can fight back against negative publicity online, with the right know-how. The 2009 Search Marketing Benchmark Guide by MarketingSherpa explains how a major bank reacted to a highly ranked site attacking its reputation.

The bank contacted other sites linked to the negative one and got them to de-link, lowering its importance to search engines like Google. In addition, the bank added lots of search-optimized content to its own site - like blogs, videos and press releases - to fill up more of the top spaces in search listings. As a result, the offending site was knocked from the top page of results.

With so many retail investors turning to the internet for information, a company’s online reputation is an IR as well as a PR concern. IROs should check their company has a strategy is in place for when the web turns hostile.

Tim Human
International Correspondent
IR magazine

Membership has its privileges

A journalist actually works in similar ways to a hedge fund manager. Or so I realized in reading a recent blog on IRHub, in which a Thomson Reuters' strategic research analyst, Glenn Curtis, outlines the tricks hedge funds use to extract information from management teams.

Here’s the Curtis list (and the reasons the strategies work):

Acting dumb. (It’s disarming.)
Hard of hearing. (Asking ‘Could you repeat that?’ often teases out a slightly better tidbit.)
The cross-check. (Hedge fund guys run the IRO’s story by a VP of sales or engineering in hopes of getting that extra detail.)
The confrontation. (Sometimes riling CFOs or IROs makes them talk more.)
Floating a trial balloon. (A gambit that needs no explanation to anyone working.)

Curtis is opening up the floor to IROs who may have seen other strange behaviors. And you can read more of his musings about hedge funds weekly on the blog, but only if you are a Thomson ONE IR client.

The new site has drawn some serious traffic around a thread on best analyst day gifts. But there are weightier topics, too, fed by those perceptive little market watchers from throughout the Thomson Reuters empire. ‘The posts all meld together into a single IR-centric blog,’ as one insider described it.

We thought you should know.

Anna Snider
North American editor
IR magazine