Fresh back from Moscow to report on Hudson Sandler’s ‘Evening with the Financial Times’s LEX column', organised by us with our friends at BNY-Mellon.
LEX’s Alan Livsey flew in from London to our event with a long standing interest in emerging markets from a career on the buy-side before journalism, where he also specialised in sectors such as energy and telecoms. The event at the Four Seasons opposite the Kremlin was a spirited debate between almost a hundred of Moscow’s most prominent communications and investor relations professionals and arguably the most influential business comment column in the world.
Alan talked about some key themes that LEX focuses on including the treatment of investors (particularly minorities), that mergers of equals do not exist, failure of share buybacks to add value, scrutinising executive pay and its loathing of dual share ownership structures. Alan added that LEX hates jargon and all present should avoid using words like “journey, platform or solution”. Although he quipped that if you need a friend “get a dog”, he emphasised that LEX is always analytical, avoided pre-conceptions and engaged with all interviewees on a background basis. Nobody is ever quoted and LEX journalists never by-lined.
Although the evening was well lubricated with good wine and excellent company, the underlying mood was subdued given the impact of the collapse in commodity prices which Alan cited as the fundamental driver of Russia’s economy. He saw no sign of any pricing recovery into the medium term at least. All agreed that although the oil price may rebound a little over the coming months, it will remain at $40 a barrel or below over the medium term. Sanctions have led to higher inflation with real incomes falling in a recessionary environment. Against this challenging background, Alan was positive about the Government’s willingness for the exchange rate to “take the strain” which, although painful, is facilitating necessary structural adjustments including supporting exports. The Government has made the right policy response. He contrasted this with the managed exchange rate policy of the Chinese authorities which would, he said, stoke further imbalances.
Questioning from the audience focussed on stock selection by international investors given Russia’s macro-economic backdrop. The consensus was that governance including the equitable treatment of minorities is key. Those with local rouble costs and US$ earnings were well placed to exploit the current situation. All agreed that management teams that continue to be accessible and committed to consistent & transparent communications have an advantage in attracting attention from the proverbial “patient investor” that LEX champions. Alan stressed that there are investors looking to select stocks in a market appearing to offer exceptional value.
Hudson Sandler has been a market leader in advising Russian corporates on international communications and investor relations and it was good to see so many clients and friends contributing to a lively and informative discussion.
Perhaps Alan’s concluding comment resonated most with his audience; “promote yourselves, don’t keep quiet”.