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The tendency to increase the number of sponsored analyzes, ie equity analyzes paid by the companies analyzed, is a worrying phenomenon in the European stock market. He writes the Wall Street Journal in a column under the wine line "Heard on the Street".
The chronicle indicates that payment analyzes have become increasingly common since the January entry into force of the new EU financial markets regulation, called "Mifid2 regulation". With Mifid2 in place, the stockbroker can not bill its analysis via the chain, but must separate the two parts of the cost.
By 2018, the average number of analysts covering large European companies had decreased and its effect was even more pronounced on the coverage of medium-sized companies. Such changes have not been observed in the US stock market in 2018, a market that does not apply Mifid2 regulation.
"The European mid-cap company is already under less scrutiny than its American counterparts, and now investors need to be more cautious when investing in Europe," writes WSJ.
It is recalled that the bond market has for a long time acted in the same way as the market of the analysis of the parity of payment which gains ground. WSJ continues: the role played by credit rating agencies in the 2008 financial crisis is also close.
"Overall, the motion against sponsored analysis is a disturbing phenomenon for the stock market, as a less negative corporate monitoring will elude the public," the report said.
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