Active Viewpoint: Stranded Assets
David Sheasby, Head of Governance and Sustainability at Martin Currie Shares His Perspective
This article was originally featured on Martin Currie's Active Library
"Imagine the scenario. A large multinational with a secure market position, steady cash flows and a healthy balance sheet suddenly and unexpectedly gets news of a regulatory change that will have a significantly negative impact on its business. Almost overnight the company is forced to write off millions in the value of its assets, projected cash flows are obliterated and the equity valuation is demolished. It’s the stuff of nightmares for every shareholder, but a prospect that is now increasingly in the forefront of investors’ minds." Quote by David Sheasby, Head of Governance and Sustainability at Martin Currie.
The issue of stranded assets – when changes in regulations, technology or public opinion can lead to the assets companies own becoming worth less (or even worthless) in the market compared against their balance sheet – has cropped up with significant frequency in recent years. But how exactly can investors understand and deal with the risks?
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