Pandemic May Lead to Large-scale Bankruptcies, Unethical Behaviours: Survey

COVID-19 pandemic may lead to large-scale bankruptcies and induce growing unethical behaviour in the investment management industry, as per a survey.

The survey, which covered more than 13,000 respondents, also noted that 39 per cent of CFA charterholders globally and 46 per cent in India expect large scale consolidation of firms.

According to the global survey by CFA Institute, 42 per cent of Asia Pacific respondents predict large-scale bankruptcies, while 50 per cent expect that the crisis may induce growing unethical behaviour in the investment management industry (against a global response of 45 per cent).

It found that close to 80 per cent of respondents think any recovery would be slow or stagnant in the short-term before picking up eventually in the medium-term.

"It will likely take two to three years for most economies to return to their pre-pandemic levels of output. Like other industries, the investment industry is also going to be reshaped by this crisis, and it is important to rebuild on a solid foundation," said Vidhu Shekhar, CFA, CIPM, Country Head, India, CFA Institute.

On the regulatory response to the situation, 41 per cent of respondents in APAC believe that regulation on market conduct should not be relaxed to encourage trading and liquidity (but 35 per cent thought that it should be relaxed).

Besides, regulators should focus on investor education about the risk of investor fraud in times of crisis (95 per cent) as well as continued market surveillance (83 per cent).

Regulators should not consider imposing security market holidays (81 per cent) or temporarily permitting companies to delay reporting on changes in their financial conditions (60 per cent), it noted.

A report titled 'Is the Coronavirus Rocking the Foundations of Capital Markets' by CFA Institute, the global association of investment management professionals, analysed the effects of coronavirus pandemic on the global economy, the capital markets, and the investment management industry.

The survey was fielded to the CFA Institute's global membership across all regions and jurisdictions where the organisation has representation in April this year.