In recent weeks my phone has been ringing with irate calls from my esteemed public relations partners in the aftermath of the release of corporate fourth-quarter earnings.
Many have been fuming. Why did you write about our fourth-quarter results that were down when our whole year was up? Why did you give it a negative spin? Is there something wrong with our relationship?
Investors by and large are more interested in knowing the latest quarter of earnings than they are the nine months that preceded it. The earlier information is already out there and investors, especially those who trade more frequently, are always more interested to know about what’s going on in the latest quarter. In the last quarter of 2015, the price of oil, which is the main financial market indicator that people look at and base many decisions upon, had some of its steepest losses. Therefore, as markets here fell, it was only natural that many corporations would start to show signs of strain.
The UAE is no stranger to boom and bust cycles. It is in eminently good company, with other commodity-rich countries such as Canada and Australia going through the same pain as miners and energy companies cut dividends and warn shareholders that more struggles could be in store as China’s economy shifts from one being led by investment in infrastructure and construction to a service economy.
It is also not in the interest of companies seeking quality long-term shareholders to try to obfuscate the reality of a situation. Intelligent investors are not oblivious to nuance. You can pull the wool over the eyes of investors some of the time, but you cannot do so all of the time.
Publicly listed companies in the UAE are legally required to disclose quarterly earnings. During the good times, PR professionals happily sent them to financial journalists. In recent quarters, it has become more of a challenge to get quarterly earnings of some companies. And sadly when some of these earnings come, they still leave a lot of questions to be answered, few of which have been answered in a satisfactory manner.
The chief raison d’être of a financial journalist is to protect shareholders, not to write puff pieces for companies and banks to pump their stock. Financial journalists are not the marketing arm of companies and banks, though sadly some of the financial press gives the impression that this is the case.
What is more disturbing is that people who work in the reputation business are often judged and rewarded according to their ability to get a positive story in the newspaper in a prominent position.
In many ways though, the much maligned porte-parole is hardly to blame. He or she is just taking orders. It is disheartening that many chief executives of companies and banks think that the media is there to work for them and publish their propaganda. This may be the case in China, but it should not be the case in the UAE.
The economy of the UAE is one of the most diverse and resilient to the shocks of the ups and downs of energy prices in the region. But if it wants to truly join the modern world, executives need to stop treating journalists as an extension of their PR machine. Give the truth a chance – it doesn’t always hurt.
Mahmoud Kassem covers banking and finance for The National.