Stock market is ‘draining’ money, warns Peel Hunt boss

Broker Peel Hunt’s boss has warned that money is ‘draining out’ of the London stock market and added that sentiment in the City was hit by the Budget.

Chief executive Steven Fine hailed a pick up in dealmaking but he sounded the alarm over the lack of new listings in London.

He also noted that confidence had taken a hit, particularly on the junior market AIM, as a result of the tax raid announced by Chancellor Rachel Reeves last month.

Peel Hunt, meanwhile, swung to a half-year profit fuelled by a surge in dealmaking sparked by multiple mergers and acquisitions (M&A).

The group posted a pre-tax profit of £1.2m for the six months to September, up from an £800,000 loss the previous year, while its revenues grew 26 per cent to £53.8m.

But despite the uplift in profit, Fine warned that most of the activity driving the business was from M&A rather than new listings in London.

He noted that money had been flowing out of UK equity funds every month for the last three-and-a-half years, a situation he described as ‘alarming.’

‘We are busy, but our pipeline is overwhelmingly focused on mergers and acquisitions. That means there’s going to be more public companies going private or merging. And that means you’ll end up losing more [listed] companies because they’re just too cheap,’ Fine told the Mail.

He also said that while the market had shown signs of ‘improving’, this had ‘slowed over the summer period’ and investor sentiment had been hit in the last few weeks of September ‘due to concerns around the UK Budget, particularly in relation to AIM’.

His comments follow a series of takeovers and de-listings over the last week which have renewed fears that the London Stock Exchange is losing its lustre and leaving listed firms open to bids or considering moves to other markets.

Takeaway delivery platform Just Eat became the latest company to jump ship on Wednesday, saying it would exit London while keeping its listing in Amsterdam.

Meanwhile, insurance giant Aviva has made an audacious swoop on rival Direct Line and Australian banking giant Macquarie has launched a £700m takeover bid for rubbish collector Renewi.

Fine estimated that around 100 companies had been taken over or delisted from London this year which even a boom of new listings would struggle to balance out.

‘If we have a bonanza of [initial public offerings] next year and we get 20 or 30 listings, that’s still a shocking ratio,’ he said.

Peel Hunt shares remained unchanged at 108.5p at yesterday’s close.

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