COM5480Investor Relations

Lecturer: Richard Tsang

COM5480

• Time: 7:00 pm – 9:15 pm every Monday• Telephone: 2864 4818 (direct line) / 2864 4828 (PA – Ms Amy Yam)• Email: richard.tsang@sprg.com.hk

Richard Tsang• 1988 graduate of JLM, concentration in broadcasting, teaching at

Chinese University since 1994 • Founder and Chairman of Strategic Public Relations Group• Over 50 board and committee member seats in various business,

religious, academic and education institutions– Chair, Asia Pacific Region, Global Development Group, Public Relations

Organisation International– Vice Chairman, The PR Trust– Council member of Hong Kong Institute of Directors– Director of the Board, Ocean Park Hong Kong– Trustee, Ocean Park Conservation Fund Hong Kong – Council Member, Hong Kong Q-Mark Council– Committee Member, Group 18 Executive Committee, FHKI– Member, Steering Committee of Caring Company, HKCSS– Advisor, The Public Relations Professionals’ Association

Richard Tsang

– Board Member, Hong Kong Bible Society– Treasurer, Hong Kong Methodist Church– Advisor, Alumni Association of the School of Journalism and Communications,

CUHK– Member, Advisory Committee of the Bachelor of Journalism and Communication

Programme of Hang Seng Management College– Member, Advisory Committee of the Bachelor of Journalism and Communication

Programme of Shu Yan University– Member of the CUHK Center for Entrepreneurship Advisory Board– Founding member of the Hong Kong Professionals and Senior Executives Association – Permanent Vice Board Chairman, China Business Update, China Shippers’

Association of Ministry of Commerce of the PRC– Special Researcher, China International Economic Development Research Centre – Council/Board member of nursery, kindergarten, primary, secondary and special

education schools– Advisor to various social enterprises

Course Requirement

• Active participation in class• Read one financial newspaper everyday• One quiz in the mid-term (30%) and one final quiz (70%)

What is Investor Relations?

What is Investor Relations (IR)

• Investor relations vs. public relations• Investor relations vs. financial communications/financial PR• IPO and IR

Public Relations

• A way of communications• A way of changing perceptions• A way of obtaining support• A way of creating favourable images• A way of enhancing understanding

Financial PR

• Financial PR is a practice of public relations• Financial PR is the public relations activities for financial institutions

– Banks– Securities houses– Fund management company– Asset/wealth management companies– Insurance companies– Authorities/regulators

• Financial PR’s target audiences are – Financial media– Practitioners– Associations/chambers of commerce– Customers/users

Financial PR

• Financial PR activities are governed by various regulators– SFC– Government licences– Industry associations

• Financial institutions concern image, trust and confidence• Financial PR activities are mostly services and product oriented

Investor Relations

• Investor relations is a discipline of financial PR • Investor relations is the communications between a listed company

with its shareholders and potential shareholders• Investor relations is a statutory requirement in some stock markets• Investor relations is a matter of transparency• Investor relations is the knowledge of who are your shareholders and

why they stay as your shareholders• Effective investor relations creates shareholder value

What is Investor Relations

• Investor relations is a strategic management responsibility that integrates finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community and other constituencies, which ultimately contributes to a company’s securities achieving fair valuation. (Adopted by the NIRI Board of Directors, March 2003)

Objectives of Investor Relations

• To see that the company is understood, in terms of its activities and objectives, and is favourably regarded in the financial and capital markets and in the investment community, and foster a consistent and positive corporate image

• To ensure full and timely public disclosure of material information, and to work with the legal staff in complying with rules of the SFC, the HKEX, and other regulatory authorities

• To respond to requests for reports and information from shareholders, professional investors, brokers, and the financial media

• To maintain productive relations with the company’s investment bankers, the specialists in its stocks, major broker-dealers, and institutional investors who follow the company or hold sizeable positions in its securities

Objectives of Investor Relations (cont’d)

• To take direct measures, where necessary, to see that the company’s shares are properly valued. This involves identifying the firm’s particular investment audience and the professionals controlling its stock float, arranging analysts’ meetings and other presentations, and generating appropriate publicity

Purposes of Investor Relations

• To create shareholder value• To fully reflect company’s value on share price

– To reflect company’s value based on future development and growth• To raise fund• To obtain support from shareholders

– Proxy solicitation

• To strengthen and expand shareholder base• To fulfill statutory requirements

Pre-requisites of Successful Investor Relations

• Management support• The quality of corporate governance• The quality of investor relations personnel• Openness and transparency• Shareholders/investors database/system

Essential Elements of Effective IR

• Disclosure• Non-selective disclosure• Frequent communication• Faster communication• Top management interaction• Effective IR tools – conference calls, media activities, company/site

visits• Utilisation of different medium – face-to-face meetings,

announcements, internet/emails, new media platform – to achieve better communication

• Understanding of investors’ needs• Better accounting practice

Essential Elements of Effective IR (cont’d)

• Voluntary quarterly results• Better corporate governance• IR department• Quality of IR personnel

Useful Websites

• www.hkex.com.hk (Hong Kong Exchanges and Clearing Limited)• www.hksfc.org.hk (The Securities and Futures Commission of Hong

Kong)• www.csrc.gov.cn (China Securities Regulatory Commission)• www.hkira.com (Hong Kong Investor Relations Association)• www.hkifa.org.hk (Hong Kong Investment Funds Association)• www.hsi.com.hk (HSI Services Limited)• www.niri.org (National Investor Relations Institute)• www.ir-soc.org.uk (Investor Relations Society)• www.iraaonline.com (Investor Relations Association (Asia))• www.irasia.com (IRAsia)