Peel Hunt profits decimated by lack of City deals

City broker Peel Hunt has revealed that half-year profits crashed to just £100,000 due to a dearth of deals and flotations on the London market and as economic woes hammered investor confidence.

The group reported pre-tax profits tumbling 99.7% from £29.5 million a year earlier, with revenues down 42.4% to £41.1 million in the six months to September 30 as the group blamed a “multi-decade low for equity capital markets activity”.

It said there were only five UK stock market listings in the first half of 2022, compared with 37 a year earlier, with just 97 equity capital markets deals raising £7.9 billion across the whole market, versus 257 deals raising £28.5 billion a year ago.

Peel Hunt chief executive Steven Fine said: “Challenging market conditions have persisted throughout our first half as the macroeconomic and geopolitical backdrop has continued to have an adverse impact on markets and investor sentiment.”

He said tougher trading comes as big institutional investors have been building up cash positions and retail investors are “being more cautious as equity markets responded to rising inflation, the cost-of-living crisis and the possibility of a lengthy UK recession”.

Rising interest rates – which have jumped to 3% since last December as the Bank of England battles to rein in soaring inflation – are also weighing on activity.

Peel Hunt noted a pick-up in market activity in the first few weeks of its second half, but warned “in the short term the outlook for capital markets and transactional activity remains challenging”.

It is hoping that a raft of firms needing to refinance their debts in the face of rising rates and challenging conditions will help provide a fillip.

“Whilst 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,” the group said.