In an interview with Bloomberg about the consequences of MiFID II, Hardman & Co’s Keith Hiscock notes that smaller listed companies are struggling to maintain their market presence with the reduction of equity research.
“The total number of recommendations on Europe’s small-cap index has dropped 7 percent so far this year, on track for the sharpest decrease in at least a decade, compared with 4 percent for the large-cap benchmark, data compiled by Bloomberg show.”
Mr. Hiscock explains that the decrease in analyst coverage leads to less stock liquidity, bringing into question the purpose of a listing; “The danger is that liquidity is going to be a lot lower and that many companies are going to say: what’s the point of being in the stock market?” he goes on to add “Investors are more reluctant to invest in companies where, for example, there’s only one analyst covering them.”
