Y2K threat fails to bug funds
Monday 13 September 1999
A majority of European managers polled by Merrill Lynch said they did not plan to reduce their holdings in sectors often seen at risk from a major computer crash, such as insurance, utilities and banks.
Insurers face exposure from claims and litigation in connection with computer faults while the operations of utilities and banks both depend on complex computer programmes.
While those who plan to cut their holdings are outnumbered by 38 per cent, a third of the 76 fund managers interviewed did not even rate the issue a consideration.
They also said they had rejected the options of adding low-risk government bonds or cash stocks to their portfolios or reducing exposure to smaller companies. The only action they planned to take was to increase their exposure to highly liquid equities to counter risks that markets will turn illiquid as consumers hoard cash.
Bryan Allworthy, European equity strategist at Merrill Lynch, said: "Investor solutions fall neatly into two camps: pre-emptive action by those who have looked into the issues and non-action by the rest."
The report came as Edward Yardeni, Deutsche Bank's chief economist in New York and author of Year 2000 Recession?, said he remained sceptical about businesses' success in tackling the problem.
Dr Yardeni said almost all those companies who claimed they were totally millennium-compliant were based on self-inspections.
"Some admit that such testing isn't even a reasonable option if they are running [24-hour-a-day] systems that can't be interrupted," he said, adding that only the UK and South Korea had programmes of independent verification and validation.
He said he still believed the Y2K issue could cause recession but said that most of the impact would come in the first six months of 2000. "I still believe there is a 70 per cent chance of a global recession next year caused mostly by weak links in the global supply chains of manufacturers relying on just-in-time deliveries of materials and parts from around the world."
He said that, despite publicity over successes in dealing with vital computer systems, no one was saying whether non-critical systems had been repaired or even considered the consequences of multiple failures of such systems.
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 3 How the language you speak changes your view of the world
- 4 The top 50 cities for young people to live in
General Election 2015: Fishing is on Nigel Farage's mind as he casts a line to the disaffected of Grimsby
Oxygen-starved 'dead zones' with no marine life up to 100-miles long discovered in the Atlantic Ocean
The man who filmed the Freddie Gray video has been arrested at gunpoint
Indonesia executions: Death row British grandmother Lindsay Sandiford will refuse to wear a blindfold when she faces firing squad
Russian warships accused of 'chasing away' Swedish vessel to prevent Baltic States from achieving energy independence
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...