SOURCE: Institutional Investor

Institutional Investor

July 05, 2016 17:15 ET

New Research From Institutional Investor Shows Transparency on the Rise, Hedge Funds Circling Asian Opportunities

Investor Relations Survey Recognizes Corporate Governance Trends Across APAC Region

HONG KONG, CHINA--(Marketwired - Jul 5, 2016) - Corporate transparency, trust, and access to top executives are more important than ever when it comes to making investment decisions, according to new research released today by Institutional Investor.

The 2016 All-Asia Executive Team survey reflects the opinions of 1,394 investment professionals at 582 financial institutions. Respondents from the buy side work at firms that collectively manage an estimated $963 billion in Asia ex-Japan equities. The in-depth research reflects feedback from both buy- and sell-side analysts, with an unparalleled level of detail on the IR efforts of companies across the region.

Three key trends emerged from this year's survey:

1. China's State Owned Enterprises (SOEs) are communicating more with investors than ever before, including those outside of Asia. The SOEs are taking disclosure more seriously as well, reflecting the country's increased focus on outbound investment and recognition of the increasing importance of perception and credibility in today's global investment environment.

2. Buyside participation in the polling surged 24 percent year on year from 2015 to 2016, while hedge funds participation in the polling of the investor relations work of Asian companies is up three percentage points over last year to 29 percent. The growth in smaller asset manager participation (less than 2.5 billion) from 74 percent to 78 percent is another significant development since the executive team polling does not weight assets under management in the voting.

3. Banks in India are seeing their CEOs, IROs and CFOs emerging as some of the top ranked in the region, reflecting greater transparency and accountability at the top, as well as a commitment to increasing shareholder value.

"With continued questions over the global economic outlook post both China slow down fears and Brexit, now is the time for companies to effectively engage investors and stakeholders around the world to tell their story and secure investment dollars," said Will Rowlands-Rees, managing director of research at Institutional Investor. "Our research recognizes those companies that are viewed to be doing an exceptional job at engaging the both the Asian and global investment community, with detailed perception studies that show within each sector the key factors by company that are resonating with investors."

Each year, II asks portfolio managers and sell-side analysts to name the best CEOs, CFOs and investor relations professionals at the Asia (ex-Japan) companies they cover, and to evaluate these businesses on several corporate governance attributes, including making board members and senior executives accessible, providing timely and accurate disclosure of essential financial information. Voting is unprompted and confidential, and rankings in each of the four categories -- Best CEO, Best CFO, Best IR Professional and Best IR Company -- are based on combined buy- and sell-side votes.

This year, four companies swept their sectors -- capturing first place in every category in which they are eligible to compete. Three of the four were Hong Kong-based, reflecting the continuing significance of Hong Kong as a financial hub:

  • China State Construction International Holdings, an engineering and construction outfit headquartered in Hong Kong, is No. 1 in Industrials.
  • Kerry Logistics Network, a Hong Kong-based provider of freight services and warehouse operations, topped the Transportation roster.
  • MGM China Holdings, a casino, hotel and resort operator in Macau, outperformed its peers in Gaming & Lodging.
  • Taiwan Semiconductor Manufacturing Corp., the world's largest semiconductor foundry, leads the line-up in Technology/Semiconductors.

Other companies that finished in the top three in every category (and the sector in which they rank) are:

  • AIA Group (Insurance)
  • Beijing Enterprises Water Group (Power)
  • China Oilfield Services (Oil & Gas)
  • China Resources Beer (Holdings) Co. (Consumer/Staples)
  • China Unicom (Hong Kong) (Telecommunications)
  • Infosys (Technology/IT Services & Software)
  • JD.com (Internet)
  • Sunny Optical Technology (Group) Co. (Technology/Hardware)

"The All-Asia Executive Team represents the region's most highly regarded companies and corporate leaders as determined by the investment professionals who know them best -- portfolio managers and sell-side researchers," said Thomas W. Johnson, director of research at Institutional Investor. "These are the people whose opinions have the power to move markets."

Another key trend evident in this year's results, Johnson adds, is the way leading CEOs are using technology to bolster their presence in underserved segments of Asian markets. For example, HDFC's Aditya Puri, the top-ranked CEO in the Banks category, says his Mumbai-based firm has been developing digital solutions to provide financial services to the 750 million people who live outside India's cities.

"There's a major logistical problem in semi-urban and rural India in getting from one place to the other, being able to access the right prices, being able to have the information, having the totality of products," Puri tells II. "Most of our products are now available on a feature phone, so a customer doesn't have to hop onto a bus or a motorbike or whatever and go from his village to the town where the branch is. He can get his balance. He can know whether his check is honored or not. He can apply for a loan."

MGM China's Grant Bowie, the No. 1 CEO in the Gaming & Lodging sector, reports that his company is putting technology front and center as it expands in Macau. He cites the theater under construction at MGM's newest casino on the Cotai Strip. It will have nine different configurations, including a flat floor, a raised floor, a stage with a proscenium arch and a stage in the round -- all of which can be changed during a single show. "In everything we've tried to do, we want to make technology not the show but simply a medium to create some amazing experiences for you to participate in either by watching it or being part of it," Bowie says.

Technological superiority is also the linchpin of China Unicom (Hong Kong)'s strategy, especially when it comes to fourth-generation networks. Xiaochu Wang, who outperforms all other CEOs in the Telecommunications sector, says that when he joined the company last fall he immediately "adjusted operating priorities by focusing resources on 4G to fuel mobile business momentum." That included accelerating mobile network deployment, opening China Unicom's 4G network to all subscribers and expediting the migration of subscribers to 4G.

These efforts are already producing positive results. China Unicom saw a net addition of 6.6 million mobile billing subscribers in the first three months of this year, compared with a net loss of 12.4 million in the same quarter last year, and mobile service revenue rose 9.3 percent quarter over quarter, to 36.2 billion yuan ($5.4 billion).

MGM's Bowie notes that appealing to a broad audience increases the likelihood of success. "I'm not a risk-taker, I'm an option creator -- because if I have more options than my competitors, then I'm taking less risk," he explains. "What I think is really important is that we're constantly looking for new opportunities."

Complete survey results can be found at http://www.institutionalinvestor.com/Research/6342/Overview.html.

About Institutional Investor
Now entering its fifth decade, Institutional Investor has consistently distinguished itself among the world's foremost financial publications with groundbreaking journalism and incisive writing that provides essential intelligence for a global audience. In addition, Institutional Investor offers a host of proprietary research and rankings that serve as respected industry benchmarks.

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