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ESMA sees valuation risks in key market segments rising 

September 8, 2014
Automated Trader

European Securities and Markets Authority publishes Report on Trends, Risks and Vulnerabilities and the Q3 Risk Dashboard. Overall, ESMA's report finds that valuation risks in key market segments are rising and merit investor attention.

In the first half of 2014, conditions in the EU's securities markets, asset management industry and market infrastructures remained favourable. Prevailing optimistic market sentiment was at odds with sluggish underlying economic fundamentals, but in line with the ultra-low interest rate environment.

Key developments in EU securities markets, fund industry and infrastructures:

Securities markets: EU securities markets realised significant gains amid low volatility. This underscored positive market sentiment in a low interest rate environment, which motivated investors to search for yield. Risk appetite remained strong as yields continued to compress and solid high-yield bond issuance was readily absorbed by markets. Consequently, valuation concerns rose along with the risks of future volatility and its effects.

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