ICGN sets sights on emerging markets expansion

The International Corporate Governance Network’s (ICGN) first board appointee from the Middle East, Dr Nasser Saidi, says he wants to push for a new focus on emerging markets within the investor-led organisation that represents more than $18 trillion of assets.

Saidi (pictured), who will chair the ICGN’s membership committee, says he will also spearhead a drive for new members in emerging markets.

While the ICGN claims membership across a broad range of capital markets across the globe, Saidi says that the organisation is under-represented in emerging markets, particularly in Asia, the Middle East and Latin America.

“More wealth is being created, particularly in Asia, but in emerging markets generally,” he says.

“So the ICGN should take a new orientation towards emerging markets.”

Saidi is the co-founder of Hawkamah Institute for Corporate Governance.

Sponsored Content

He is also the chief economist at the Dubai International Financial Centre Authority, a regulatory body that operates one of Dubai’s financial free zones designed to attract offshore investment.

Hawkamah aims to promote corporate governance in the region and in February partnered with Standard & Poor’s to build a composite stock index of 11 Middle Eastern markets that takes into consideration environmental, social and corporate governance issues.

Saidi says the ICGN has its historical roots in Europe and the US but that the particular concerns of emerging market investors need to be heard.

“What I want to bring to the table is precisely the kinds of issues that are relevant to emerging markets,” he says.

“If you look at the standards, codes and guidelines that typically get developed for corporate governance they are typically developed for highly developed, highly organised markets.

“But they are much less in tune with emerging markets where there are much more family enterprises and state-owned enterprises.”

Along with Saidi, the ICGN appointed to its board Erik Breen, the head of responsible investing and senior vice-president of European fund manager Robeco; and Carol Hansell, a senior partner at Canadian law firm Davies, Ward, Phillips and Vineberg LLP.

Saidi says pressing emerging-market concerns he wants to highlight include: market access for both emerging-market and developed-market investors to each other’s markets; issues to do with minority shareholders; and how markets are classified.

“Morgan Stanley, for example, classifies markets into frontier, emerging and developed categories, which makes a big difference for access by institutional investors,” he says.

“If you are classified as frontier you are not on the map so far as institutional investors are concerned. But the criteria that is typically used may be biased against emerging markets.”

Saidi says sovereign wealth funds in the Middle East are usually passive investors, but as long-term investors they need to take a more active role in the companies they invest in.

Saidi says that sovereign wealth funds and investment funds in emerging markets are long-term investors and they share many of the same interests in ensuring good corporate governance as pension funds and endowments in developed markets.

“The large sovereign wealth funds and investment funds in the Middle East are typically not represented on the boards of the companies they invest in,” he says.

“I think that should change, because they are looking at things as purely portfolio investors and being very passive, and as a result their interests are not being represented.”

While acknowledging that the Middle East and many emerging markets are still developing corporate governance practices, Saidi says that increasing the number of independent directors and improving board expertise are areas that need to be focused on.

Particularly where there was a predominance of family-run companies, having independent directors was a vital step towards improving corporate governance, Saidi says.

Along with Saidi, the ICGN board also has emerging market representation through Sandra Guerra, the founding partner of Better Governance, a Brazilian-based corporate governance consultancy.

The three new ICGN directors succeed Rients Abma from Dutch-based corporate governance forum Eumedion; David Beatty, from the Rotman School of Management; and Mark Preisinger, from Coca-Cola Company US.

Leave a Comment

Sort content by

The power of technology: forward looking risk tools

The finance industry is slow in its willingness to innovate around technology, and is behind other industries says Jessica Donohue executive vice president, chief innovation officer and head of advisory and information solutions at State Street. And the cost of that inability, or stubbornness, around technology innovation is not inconsequential. State Street recently released its

AustralianSuper contemplates foreign outposts

Australia’s largest superannuation fund, AustralianSuper, is considering whether it should have its own investment management and currency hedging teams based in Europe and America. Due to the mandatory nature of the system in Australia, the current rate of funds under management growth means assets are doubling every four to five years. Peter Curtis, head of

Stanford dumps coal: why divestment doesn’t work

The decision by the Stanford University endowment to divest from coal stocks might produce some positive PR, but from an investment perspective it’s only making them worse off, says Andrew Ang, professor of finance at Columbia University, who says the move prompts the bigger question of what the purpose of a university endowment actually is.

GPIF continues equities rampage

The giant Japanese pension fund, the Government Pension Investment Fund, continues its quest to move from bonds into equities and shift around 30 per cent of assets, or around $327 billion, out of domestic bonds and short term assets, appointing four new equities managers. The new asset allocation, approved in October last year, sees the

How to use smart beta

While smart beta is a much-talked about concept, implementation is slow. Part of the reluctance of investors is the risk of sustained underperformance, but that can be overcome by matching portfolio liquidity requirements with factor cycle duration. Amanda White speaks to Michael Hunstad, head of quantitative equity research, global equity management, at Northern Trust. Sustained

Liquidity premium escapes UK investors

  UK pension funds have not taking advantage of their comparative advantage as long-term investors and have not earned a positive long-run liquidity premium on their investments, according to a paper from the Cass Business School that examines UK pension funds’ monthly allocations to major asset classes over the period 1987-2012. The authors – David

Previous