Three City brokers warn that weak activity in the markets has hit their businesses
Three City brokers have warned that weak activity in the markets has hit their businesses.
As the industry grapples with the economic downturn, Numis said revenues for the six months to the end of March were likely down 14 percent year-on-year to around £64 million due to “weaker” investment banking markets.
The company predicted there would be no “meaningful uptick” in new listing activity over the next six months as concerns about high interest rates and inflation continued to dampen sentiment in global stock markets.
Numis also said investor sentiment towards the UK remained ‘relatively weak’, adding that institutions targeting the UK domestic market had experienced a ‘sustained’ outflow of funds over the past six months. Shares fell 2.4 percent, or 5.25 pence, to 210 pence.
Rival Peel Hunt, which also targets small and medium-sized businesses, saw its stock fall 2.8 percent, or 3 pence, to 103 pence after it issued a profit warning.
Under pressure: City brokers and asset managers have been toppled over the past year
Revenues for the year to March 31 fell from £131m in 2022 to £82m as the ‘uncertain global economic environment’ hit investment banking businesses.
The company also warned that activity in capital markets remained “at an all-time low” as it continued to face cost pressures from inflation.
As a result, it warned it was likely to have been “marginally loss-making” for the year, worse than market expectations that it would break even.
While the investment banking division has shown a “gradual improvement” in recent weeks, Peel Hunt warned that risk remained high due to “adverse” economic news, including the recent bailouts of US banks and troubled European lender Credit Suisse.
WH Ireland, meanwhile, said market conditions continued to affect its business and as a result traded below expectations. It made a loss of more than £2.2 million for the year to March. Shares fell 2.6 percent, or 0.5 pence, to 18.5 pence.
City brokers and investment managers have been toppled over the past year as the economic downturn put the brakes on closing deals, fundraising and trade shows.