Valuation risks abound warns Esma

The European Securities and Markets Authority (Esma) has warned that investors face significant risks around asset price valuations because of factors such as financial weakness and geopolitical uncertainty.

The warning comes in its report Trends, Risks and Vulnerabilities No. 2, 2017 (TRV), which outlines expectations for the second half of 2017.

Another concern is cybersecurity. Esma identifies this in respect of operation risk, on which it now has adopted a negative outlook.

The risks to economic growth in the EU and elsewhere stems from structural problems in EU member states, rising public and private debt internationally, and the political uncertainties from issues such as Brexit – which Esma identifies as the “among the most important political sources of risk”.

The twice-yearly TRV is reported to the European Commission, Parliament and Council, and is complemented by a quarterly Risk Dashboard.

The latest of these quarterly reports – https://www.esma.europa.eu/sites/default/files/library/esma50-165-413_esma_risk_dashboard_no_3_2017.pdf – noted that certain risks remain high, albeit stable, such as market, liquidity and contagion risks.

That said, the overall risk assessment remains unchanged from that of the first half of the year, according to the latest TRV.

ABOUT THE AUTHOR
Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 16 years he has been based in London writing about funds and investments . From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope.

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