Yahoo Finance ‘Switch has been flicked’ on London stock market decline
The London stock market has turned a corner after two years of gloom, according to the stockbroker that last year predicted a “doom loop” on the exchange.
Steven Fine, chief executive of City stockbroker Peel Hunt, said there were signs of recovery and declared that the worst was over for London’s stricken exchange, which has been struggling to attract floats and seen a wave of companies leave.
Mr Fine said: “We’ve had 10 bad quarters in this industry… but now it’s better than it’s been.”
He said a “switch has been flicked”, adding: “There has been a shift in sentiment and that is a very good precursor for a rebound in activity over the coming quarters.”
Mr Fine pointed to the float of Raspberry Pi earlier this week, which Peel Hunt worked on, as evidence of improved sentiment. Shares spiked almost 40pc on their opening day of trading.
A £7bn equity raise for National Grid, the largest in a decade, and follow-on share sales in Haleon and the London Stock Exchange Group are also evidence of a healthier London market, Mr Fine said.
Peel Hunt last year warned that parts of the market were stuck in a “doom loop”.
Low prices meant fewer investors were buying stocks, sending their prices spiralling further down. At the same time, overseas investors were using the UK “discount” to buy British businesses on the cheap, meaning there were fewer stocks to own.
Peel Hunt warned that the index of smaller companies could cease to exist in the UK by 2028 if the decline continued.
Mr Fine said a combination of better GDP numbers, signs of easing inflation and expectations of falling interest rates were all contributing to the better mood in stock markets.
More stable politics are also helping.
He said: “Whether it’s Sunak and Hunt or Starmer and Reeves, they are very solid people. Either of them will do a great job of running this country.”
Brokers such as Peel Hunt hope that Raspberry Pi’s float will revive interest in companies tapping the stock market.
Mr Fine said outflows from the London stock market had likely peaked.
“We did a very good job in this country of shooting ourselves in the foot,” he said.
Peel Hunt made a wider loss in the year ending March 2024, with a pre-tax loss of £3.3m versus £1.5m in the prior period.
The main culprit was stockbroking trading, with revenues down 12pc to £29.6m. This offset a 39pc rise in investment banking fees to £32.6m.
