The ECB restarted quantitative easing (QE) this week to tackle the region’s slowdown, but analysts at Bank of America Merrill Lynch predicted the bond-buying programme will mean debt, not stocks, is “the financing tool of the future”.

The cost of taking on debt for firms will be pinned down by QE, a key tool used by central banks to boost economies following the financial crisis.

However, this will lead to “de-equitisation” on European markets where the number of listed companies shrinks, the Wall Street bank warned. [...]

Full article on The Telegraph

Related article on City AM: ECB warned over bond-buying’s effect on stock markets

[...]Bank of America Merrill Lynch (BoAML) has warned that prolonged QE will mean companies will turn to debt, rather than issuing stocks, for their funding needs.

“What seems a given is that credit markets will experience another bout of rapid expansion, coaxed on by the proliferation of negative yields,” BoAML strategist Barnaby Martin in a note seen by The Telegraph. [...]

BoAML’s note addressed growing fears over the decline of stock markets such as the London Stock Exchange (LSE). By the end of September, London had hosted just 25 share offerings compared with 55 over the whole of 2018.[...]

Fewer listings mean the number of companies releasing detailed results would drop, giving investors “a less reliable pulse on the economy,” BoAML said.

Full article on City AM