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Research
Briefs .....
Despite concerns about the impact the collapse of a large hedge fund might
have on financial markets the evidence is that the markets are standing up to
pressure, according to the semi-annual financial stability review from the
European Central Bank.
The review noted that the collapse of Amaranth Advisors in September 2006 did
not lead to wider problems in the market, demonstrating, the review said, the
growing maturity of the hedge fund sector. Although the review found that the
outlook for financial stability was largely favourable in the euro area it
concluded that the rapidly increasing credit risk transfer activity, which hedge
funds are involved in, may become a more significant risk. The review also
identified risks in the corporate sector related to the rise in leveraged
buy-out activity.
Many analysts (44%) would be prepared to change their rating of a company
based on the narrative reporting of key risks and financial measures which a
company presents to them, according to research published by
KPMG. The survey of analysts focused on the
oil and gas sector and demonstrated, KPMG said, that while companies in this
area are generally good at narrative reporting analysts still believe
improvements can be made. Although another finding of the research was that
analysts wanted greater standardisation of reporting KPMG suggested this could
work against the ultimate aim of narrative reporting which is seeing a company
through its management's eyes. The survey found that analysts are increasingly
looking for more disclosure of risks and how they are managed. Looking at what
should be reported, corporate social responsibility was the lowest rank area.
January, 2007 |
