I was genuinely pleased to read Mr Kontogiannis’s frank analysis of investor relations (IR) in Greek listed companies. IR is a significant subject and an area in which many companies in the Greek market lag corporates in other EU markets. Developing his analysis, I would add that, if practiced properly, IR has significance for the wider market as a whole, encouraging inward investment, thus increasing stock market liquidity, ultimately driving wealth creation and broader economic stability. However, overseas institutional investors can be apathetic. From an international perspective, the Greek stock market is relatively small, largely composed of smaller companies and lacking in real sector specialization. In addition to scale issues, it is also rather illiquid. Scale and illiquidity are significant deterrents to international investors, who typically like to be able to take relatively large positions in companies and to be able to trade with relative ease. These factors in part explain investor apathy and are accentuated by the issue of weaker Greek IR. The word «relatively» is used here regularly and intentionally, highlighting the subjective and relative nature of investing and the fact that that markets are heavily influenced by prevailing sentiment. Investors have a huge variety of «relative» investment opportunities competing for their attention at any one time. International institutional investment funds today are highly mobile and can and do often move freely from market to market and among asset class, intensifying competition and necessitating differentiation of investment cases. On this basis, should we conclude that the Greek stock market is not attractive to overseas investors? The answer to this has to be «no,» as recent strong inflows of foreign funds – into privatizations, placings (recently in the banking sector) and a select number of large commercial ventures – show. Why is it that these specific stocks have attracted international funds? There are no hard and fast rules, but taking a few of these as examples (banks, utilities and large consumer companies), the prime attraction is probably growth prospects, both through exposure to the domestic Greek market and faster growing neighboring markets. Another key attraction is the strength of cashflow distributed as dividends in more mature businesses. An also important factor is likely the risk-averse nature of foreign institutional investors who want to see stable well-managed businesses which combine compelling commercial propositions with sound business practices, delivering managed and controlled growth. A glance at the Athens Stock Exchange (ASE) tells you that many high-growth Greek companies have excellent management, but that they also often trade at significant discounts to overseas comparators. Why do few attract meaningful overseas institutional investment? To use a telecoms term, it is the «last mile» that makes the difference between a good company attracting investment or not. It is not enough for companies just to succeed. They have to be seen to succeed and they have to market their success to investors within the context of a predetermined and well-articulated strategy. Risk averse as they may be, overseas investors are accustomed to formulaic and detailed IR, comprehensive disclosure and thorough insights into corporate activities. Without such openness, foreign money tends to ignore a market and move on to other more accommodating ones. IR in itself is not, however, a solution. Poorly managed, unreliable companies will fail to attract and retain investors, no matter how professional they are at IR. So to return to the core theme, those Greek companies that are committed to effective investor relations attract and benefit from the foreign investment. International investors are now very «stock specific» in Greek investments. There is no real reason to assume that the adoption of IFRS reporting in 2005 will change this: IR is not just about reporting standards or having the statutory IR officer, it is about being proactive, visible and transparent, «the communication and benchmarking of progress against a strategy» as part of a process of building up trust. Ultimately IR is an activity which a company needs to commit to from the very top if it wants to enjoy the benefits of overseas demand for its stock and the versatility which the virtuous circle of investor confidence brings to its financing and expansion opportunities. A not inconsiderable element of IR is also rather qualitative, like the building of favorable relationships and access to well-informed spokespeople. Those companies which have most successfully attracted foreign investors provide the market with a variety of services, including quarterly conference calls hosted by senior management, detailed quarterly earnings statements, clear and well-presented newsflow, the opportunity to meet investors on roadshows or at major investor conferences organized by the big investment banks etc. So, IR is not «nice to have,» it is an activity which requires considerable commitment, attention to detail and management time. For Greece, almost more than any other market in the EU, there is a need to compensate for foreign prejudices. In this post-Parmalat era, investors are especially skeptical and hawkish. IR is not, however, all about presentation (and the detailed preparation this requires). Audience selection, the targeting of investors, is just as important. Different investors have different investment strategies and targeting the most suitable and appropriate, consistent with a company’s strategic goals, is essential in getting results. If more Greek listed companies embraced IR, and were more successful in attracting international investors themselves, then the liquidity of the ASE as a whole would be enhanced. Tax and legislative issues aside, a more liquid ASE would be more attractive to some of Greece’s high growth companies, which are currently listing, and listed, overseas, further developing the market and its liquidity. Ultimately, the market and its constituents can be an important catalyst for the whole economy, increasing the country’s profile and access to overseas capital, but many Greek companies need to work individually and collectively to develop their investor relations offer to achieve this. ALASTAIR HETHERINGTON, Partner, Greece Country Manager, Financial Dynamics.