City stockbroker Numis warned on Tuesday a combination of a drop in equities prices and the impending exit of the UK from the EU were taking a toll on its corporate and institutional clients.
The Aim-listed broker — one of the largest catering to small and mid-cap companies in London — said that broking transaction numbers and institutional income had both fallen by a quarter in the four months to the end of January on poor stock market performance and continuing uncertainty weighing on investor sentiment.
“Since the start of the financial year [in October], UK equity indices have suffered material declines and the domestic political situation has significantly impacted investor sentiment in the UK,” the group said in a trading statement.
“As a result the market backdrop has been particularly challenging for our corporate and institutional clients, which has ultimately impacted our trading performance in the first four months of the year.”
Britain’s broad FTSE all-share index has slumped 6.3 per cent since the beginning of October, roughly in-line with the 7 per cent fall recorded by MSCI’s gauge of equities in developed market stocks, according to Refinitiv data.
The group is made up of two investment banking divisions: corporate broking and advisory, which accounts for two-thirds if its income, and equities, which accounts for the remaining third. Both have taken a hit in the four months to the end of January.
In corporate broking and advisory, Numis said performance was in line with the second half of the 2018 financial year, which ended in September, but well below the same period one year previously. While deal fees remained steady, transaction volumes were down by 25 per cent, it said.
In equities, it said institutional income was also around a quarter below the same period one year previously “reflecting depressed market activity levels”. It added that its trading book was “marginally loss making” for the period.
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