Money Managers Gaze into the Crystal Ball

December 19, 2001 ( - Three-quarters of money managers expect their institutional clients to turn up the pressure on listed companies on corporate governance and disclosure issues in 2002, a new survey finds.

Accounting Benefits

The survey by Broadgate Consultants, Inc also showed that more than 70% of the sample expressed concern that the increase in employee stock options is diluting shareholder value.

In addition, 80% of the sample is troubled by overly optimistic assumptions used by corporations for returns related to their pension funds, which can often boost earnings expectations.

Hot Spots

In terms of hot spots in the equity market,

· just over 90% of the sample expect small cap stocks to rebound in 2002, and
· half of the respondents expect technology stocks to lead the market out of the doldrums

Increased takeover activity is also expected to contribute to market gains next year, according to the survey, with the following industries expected to see increased takeover activity:

· technology,
· telecommunications,
· financial institutions, and
· health care

The survey also saw 40% of respondents predicting a strong initial public offering (IPO) market in the first half of 2002, and in the wake of the recent scandals, 51% want tougher IPO regulations.

January Effect

Questioned on the possibility of a January effect on equity valuations in 2002,

· more than half believe the market would experience this positive effect,
· about 18% of the respondents believe it’s a thing of the past,
· while 27% said there would be no January effect – but still think its a valid phenomenon

The sample comprised 89 fund managers.