PR practitioners, especially the Investor Relations breed
are in for a trench fight of sorts. Now the men would be separated from the
boys depending on how they respond to the ongoing oil crisis.
Oil companies are taking a bashing as sweet crude fell to as
low as $49.68 a barrel last Monday, the lowest since the 2009 global crises.
Tumbling along with oil prices are stock prices. With this scenario, you are
going to have an edgy army of brooding investors.
Should investors head for the door, your organization is
going to hurt for it. But you are in an uncommon position to avert disaster.
Your job is to calm their nerves and seize on the
opportunity the crisis presents on a platter to send out the right message as
an Investor Relations practitioner.
Below are a few prescriptions on what to do (hey the
prescriptions are no silver bullets). But before that, let us do a little
background on the crisis.
Oil prices have plunged more than 50% over the past few
months for a variety of reasons.
Concerns about weak global demand, particularly in Europe,
Asia and Latin America have been a big factor. OPEC seems determined to flood
the market until the ‘bad guys’ who supply shale gas are all obliterated.
Already, oil produces in some parts of Scotland are too
bloodied to carry on.
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| Oil Price for much of 2014 |
There are fears that persistently lower prices from a long
drawn war between the shale guys and OPEC could lead to a slowdown in drilling
in the United States. Some experts have argued the possibility of the specter
$30 oil.
The direct result is the free fall of markets across
geography. In Nigeria, “The first
trading session on the Nigeria Stock Exchange (NSE) in 2015 ended on the
negative territory... at the close of the market on Monday (January 5), the NSE
All-share Index (ASI) declined by 713.86 basis points or 2.06 per cent, to
close at 33,943.29 basis points. Similarly, the market capitalization of the
NSE depreciated by N240 billion to close at N11.237 trillion.”
The steep drop was replicated by most economies; “in London
the MSCI Emerging Markets Index fell 1 percent to 931.55 at 1:14 p.m. in
London, extending its four-day loss to 2.6 percent. The energy-industry
subgroup on the gauge tumbled for an 11th day....”
From Dubai to Durban, the results are the same and there
doesn’t seem to be respite in the short run. AS we already noted, there are
fears that prices may get as low as $30.
This gloomy picture has investors growing more nervous about
what the slide in oil prices might mean for the global economy.
This is the point the investor relations team must take
charge; more than the corporate economists who must show by charts and graphs
the prospects of the firm, the IR team must take to the podium to offer
soothing words across multiple platforms-social media and traditional media.
The IR team must assure investors that:
1. The slump is a systemic phenomenon. They should let it
out that the drop in stock prices is not peculiar to theirs. That even beyond
the oil companies that are directly affected, other companies are also
affected.
2. They must educate investors on why the market is taking a
dive; that it is a direct result of a fight between innovation and a strong
cartel and so bloody noses are inevitable.
3. Encourage them to hang on; that holding stocks for the
long run is a winning strategy. Stocks have historically outperformed other
assets (at least US historical data tells us so).
4. Tell investors how the company is currently weathering
the storm and what strategies are been put in place to further strengthen the
company (including core competencies).
5. Show the company’s historical performance using it as a
predictor of a better future performance
6. Use the opportunity to re-present the caliber of
professionals on the company’s boards and the track record of managers.
Now you are armed for the crisis. Remember crises are once
in a lifetime events (read opportunity); deal with this one decisively by
following my six point prescription.
References
This is a brilliant piece. It makes an interesting read for information
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