Across-the-board increase in the levels of equity. What effects can we expect?

- "The level of equity will increase in all sectors:
• for banks and insurance companies, because of the new regulations;
• for non-financial companies, because of the determination to no longer depend on external financing and the distortion of income sharing at the expense of wage earners."
- "These developments will probably lead to:
• an increase in equity issuance, while demand for equities is weak in the aftermath of the crisis, which will lead to downward pressure on stock market prices;
• a fall in return on equity and earnings per share, hence another cause for a fall in share prices."

Natixis Flash Economics 416 20100826

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