Can we get back on the investor’s radar screen?

The cost of foreign travel for a CEO to raise awareness for a publicly listed company that has a big market cap can be commercially justified. This is the reason why state visits, like the recent ones to China and Japan, always include a contingent of businessmen meeting up with their industry counterparts or possible buyers of their products or services. They also pad up the success of the visit measured by the dollar value of signed deals, including those with memos of understanding or intent.

Newly launched IPOs or bond floats of companies undergo “road shows” to make their case to potential investors and answer questions on strategies, risks, and returns. These visits also respond to questions on the political climate which affects business confidence too. Is there a climate change here as well?

Such marketing exercises are intended to put the country and its investment environment in a metaphorical “radar screen” which reveals desirable spots in the investment landscape. While some economists, especially those justifying dropping volumes and heightened market volatility, consider such efforts as attracting only “hot money” or short-term, fair-weather investments. Even such parked cash, however, can define countries as flavors of the month, rising economies which attract the herd of investors seduced by the siren song of profits.

The radar screen captures investor sentiment. It does not refer to the same physical radar that air controllers use to manage landings and takeoffs, and avoid crashes. The investment equivalent reveals the mindsets and agenda of investors, political analysts, aid donors, philanthropists, travel bloggers, and art collectors from other countries as well as our own.

In terms of investments in this part of the world, wasn’t the Philippines just six months ago considered the new darling? A slew of good news on credit rating upgrades, rising dollar reserves, budget surpluses, a vigorous stock market, and seven percent GDP growth all pointed to an economy in a good trajectory of success. Yes, even the peaceful election and the clear mandate of the winner boded well for the economy…for a while.

Countries get on and off this screen following where the investment herd seems to be moving. And they seem to be watching the same screen. A country with a stable economy, a mostly young population, and a consumption-driven GDP growth (70 percent of the economy) seems headed for the stars…for a while.

How do countries get on the investor’s radar screen in the first place? Success stories are heralded in media, often involving profit opportunities opening up in a rising conversation of interest. The stories are driven by foreign investors covered by foreign media and the pleasant ways of doing business here. Opening of new plants, rising FDIs, growing tourist arrivals, and a stable exchange rate, as well as low inflation are economic stories that feed the perception of success that register on the radar screen.

This is the “virtuous cycle” of economics.

There is a flip side to this however.

There is the unfavorable radar screen that attracts political media coverage, dead bodies on the streets becoming a daily fare in the news, oratorical excesses and the declaration of diplomatic pivots, as well as the coarsening of public speech. This media-propelled political screen featuring horror stories and travel advisories is one that countries try to avoid. While such places attract media and correspondents as tourists, it is not the kind of fame (or notoriety) to strive for.

The disaster radar screen still forgives natural calamities like tsunami, typhoons, and earthquakes. These elicit sympathy and a call for donations. Such bad news is not manmade or reversible. It is what the insurance industry calls “Acts of God”, external forces which can strike any country and has nothing to do with manmade mayhem.

Being “off the radar screen” in business denotes irrelevance, the absence of interest from investors and companies that matter. There are after all, alternative investment recipient countries available—why even bother to understand what the turmoil is all about, what is meant and not meant in public declarations?

Cable news channels provide clues on what’s playing on the radar screen. Their resource persons and guests come from particular countries or comment on them as befitting the reigning radar screen gods. Routine information too like weather, trade fairs, currency movements, and stock exchange closing prices are featured only for selected cities. Not making it one list of important cities is an indicator that one is absent from the radar screen.

CNN, Bloomberg, and BBC carry country advertisements luring tourists with quick images of food, beaches, monuments, and smiling natives, ready to roll out the red carpet for foreigners. Cities like Warsaw and Budapest which do not naturally come to mind on the “whoopee scale” for trips make their pitches too for hosting business conferences. Marketing countries has become part of the advertising cycle.

Even in the social milieu, space on the radar screen of new media is avidly sought. There are different lists here consisting of the entertainment folks (e-folks) and those with social caches and high net worth (s-folks) along with their service providers like decorators, couturiers, and event planners. Politicians too (p-folks) and their followers (or army) have co-opted social media. Sometimes the lists overlap as when an actress (e-folk) bashes a politician (p-folk) regarding psychological fitness.

Life outside the radar screen is not necessarily unpleasant. Being no longer flavor of the moment is justified as striking an independent course, which is the same as going off into the wilderness of obscurity. This is fine, if you really don’t want to be discovered.

Life off the radar screen can be justified. No one comments on what’s going on in the arid margins of media attention. Still, with all the efforts to get on the radar screen of the international community not just to attract tourists and investments, but also to build up the brand of being Filipino, whether living here or abroad, one wonders if falling off the radar screen offers benefits beyond being ignored.

In the words of Oscar Wilde – “There’s one thing worse than being talked about, and that is not being talked about.” Still it’s helpful to differentiate between the noise and the message. This may be happening already with the noise getting more subdued.

Philequity Management is the fund manager of the leading mutual funds in the Philippines. Visit www.philequity.net to learn more about Philequity’s managed funds or to view previous articles.  For inquiries or to send feedback, please call (02) 689-8080 or email [email protected].