BME and IEAF launch “Lighthouse”, a fundamental analysis service aimed at the Equity market through which research coverage is provided for those listed securities that are not followed by financial firms.
This initiative does not seek to advise investors but to improve the market’s knowledge of those listed securities about whose fundamentals there is no information available. Thanks to this analysis service the trend will be for these companies’ market liquidity to increase and their price to get closer to their fundamental value.
“The lack of research of listed companies causes significant negative effects: lower liquidity, inadequate valuation and investor’s access difficulties. Hence the importance and the need to create Lighthouse”, stated Jorge Yzaguirre, Markets Director of BME. Javier Méndez, Secretary General of IEAF, added that this situation tends to aggravate with MiFID II’s entry into force “as it mandates managers to separate costs from execution, which poses a risk for the research coverage of smaller securities”.
The problem with non-covered securities is universal: it is estimated that between 30% and 40% of listed stocks worldwide are not covered at all by research firms.
In the Spanish market the problem is even bigger: around 60 stocks listed on the stock exchange are not currently covered, to which another 40 MAB-listed companies should be added. That is, the ratio of non-covered companies in relation to the entire market is above 50%.
“Lighthouse” is supported by BME and enjoys the prestige, independence and renown of the research service provided by IEAF, a non-profit firm.