Volatile markets see profits plunge at Peel Hunt
By Abigail Townsend
Date: Thursday 01 Dec 2022
(Sharecast News) - Interim profits were wiped out at Peel Hunt, the broker said on Thursday, after volatile markets and the weakened economic climate curbed City deals.
The AIM-listed firm reported revenues of £41.1m for the six months to 30 September, a 42% decline, while pre-tax profits tumbled to just £100,000 from £29.5m a year earlier.
Steven Fine, chief executive, said: "The macro and geopolitical backdrop has continued to have an adverse impact on markets and investor sentiment. Equity capital markets (ECM) activity has been at a multi-decade low, and market volumes have been reduced materially during this period.
"This is due to several factors, including investor redemptions, institutional investors building up cash positions, and retail investors being more cautious as equity markets responded to rising inflation, the cost of living crisis and the possibility of a lengthy UK recession."
During the first half, the FTSE 250 and AIM-All-Share - which act as barometers for Peel Hunt's business activities - declined 18.9% and 22.6% respectively. There were five UK flotations in the first six months of 2022, compared to 37 a year ago, the broker noted, while just 97 deals raised £7.9bn across the entire market. A year ago, 257 deals raised £28.5bn during the same period.
Looking to the current half, Fine said the short term outlook for capital markets and transactional activity remained "challenging", despite an increase in market activity.
He continued: "A return to a normalised interest rate environment has inevitably created short-term challenges, but it may also present a number of medium-term opportunities.
"While we expect that private capital will continue to be a valuable source of funding for UK companies, a repricing of debt should drive a resurgence in public equity finance."
Interest rates are now at 3%, up from 0.25% last December, and a further increase is widely expected when the Monetary Policy Committee meets later this month.
As at 0930 GMT, shares in Peel Hunt were down 6% at 78p.
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