What the BRICs Can Learn From Israel

Posted by on March 1st, 2011

In the March issue of PRWeek, reporter Danielle Drolet wrote and in-depth story on “Building BRICs.”  In it, she touches on what  some of the BRICs can learn from Israel.  I wanted to share a few more thoughts on the topic.

For the past decade that KCSA has been doing business in Israel, the New-Jersey-sized-nation was classified by MSCI as an emerging market.  However, Israel reached a major milestone last May as it was officially included in MSCI’s world index which includes most developed markets as well as in its Europe Australasia and Far East index.

Officially now called the BRICS (with the recent addition of South Africa), companies in BRICS countries are considered emerging market companies according to MSCI.  As a result, investors tend to apply an “emerging market” discount to their valuations.  Just as Israel accomplished in the last decade, BRICS companies can also, over time, rid themselves of the emerging market discount by thinking about the level of transparency in their communications as well as how other cultural and foreign barriers cause U.S. investors to be more cautious in their investing.  By understanding what U.S. institutional investors are looking for from a company in its communications (both in form and substance) and communicating what and how U.S. investors require, the valuations BRICS companies are able to achieve eventually will no longer be discounted and the countries in which they reside will no longer be grouped into emerging market status.

BRICS companies – and other companies from emerging markets looking to do business in the U.S. – should consider the following in their communications:

1)    Make sure the English used has the meaning for which it is intended – a word-for-word translation may not have its intended meaning in the foreign language when translated into English.

2)    Communicate with U.S. investors more than once a quarter – put out substantive press releases in addition to quarterly earnings press releases to demonstrate that a company is executing on a well-stated plan of growth.

3)    Consider having an investor relations and communications professional located in the U.S., either on staff or outsourced.

4)    Visit with top shareholders and analysts at least once a quarter.

5)    Conduct non-deal roadshows either on your own or with your sponsoring investment banks several times a year to introduce new investors to your company.

6)    Present at financial institution investor conferences.

7)    Conduct financial media relations to either showcase your company or establish management as a thought leader in its respective industry.