Numis/Peel Hunt: brokers try to look on the bright side of deal freeze
The London market is frosty right now, with equity capital transactions at their lowest level in a decade
Stockbrokers in the UK can be forgiven for feeling uneasy when contemplating the year of dealmaking ahead in 2023.
At City outfit Numis, a one-third decline in revenues in the 12 months to September 30 is striking. Yet in the context of sparse equity financings, that decline could have been even worse. The broker’s claim that it is successfully diversifying its business deserves attention.
The London market is exceedingly frosty right now. Equity capital transactions are at their lowest level in a decade. Rising interest rates and geopolitical uncertainty have put a stop to new investment. Balance sheets at many UK companies are full of cash raised in the frenzy of the past two years. Add this to the waning attractions of London as a global listing location and it is little wonder brokers are feeling down.
Reflecting the chill, Numis shares have halved from last year’s peak. They now trade close to the decade lows experienced at the start of the Covid-19 pandemic.
On the bright side, at least that performance beats rival Peel Hunt, whose shares have lost almost two-thirds of their value over the same period. Last week, the smaller broker said its half-year revenues were down 40 per cent.