BUSINESS WITH PERSONALITY
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CITYAM.COM
ISSUE 4,034
FREE SIGNS OF OPTIMISM?
Sun’s out, stocks out: UBS chief CHRIS DORRELL
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-4.2%
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NEGATIVE EQUITIES HOUSEBUILDERS TAKE ANOTHER BEATING AFTER MISERABLE CREST WARNING
LAURA MCGUIRE AND CITY A.M. REPORTERS MORE THAN half a billion was wiped off the UK’s listed housebuilders yesterday after a miserable trading update, and worrying house price data, added to a general sense of gloom across the sector. Crest Nicholson said a combination of “persistently” high inflation and interest rates had forced it to downgrade its full year profit guidance from £74m to £50m.
Investors bailed out of Crest and a host of competitors yesterday. The update came after new data from Rightmove, the listings website, revealed the worst August for property prices in years alongside a significant slowdown in transaction volumes. “Rivals followed the housebuilder down to the FTSE 100 basement where they’ve languished for the rest of the day as investors mull over the state of the UK’s housing market and price in a rather
gloomy end to the year for the sector with 2024 not looking a whole lot brighter,” said Danni Hewson, AJ Bell’s head of financial analysis. The housing market has been bruised by more than a dozen interest rate hikes in a row as the Bank of England belatedly attempts to crack down on runaway inflation. The City has priced in at least one more hike to the headline rate thanks to wage growth data which suggested the
dreaded ‘wage price spiral’ – where wages and prices go up in parallel – has embedded itself into the UK economy. There were some bright spots for the housing industry yesterday. Santander cut its mortgage rates yesterday in the latest move by lenders to reduce borrowing costs, as the interest rate peak finally comes into view. However demand remains subdued as the market adjusts to the new normal of higher-for-longer rates.
CITY sentiment may not be matching the improved summer weather but one global banking executive believes a turnaround is on its way. The “clouds have started to lift” on the global economy and investors are beginning to warm to the idea of backing stocks again, according to a top dog at UBS. The firm’s Global Wealth Management’s investment chief Mark Haefele said the strains of rising interest rates globally had begun to cool as the US central bank toned down the speed of its rate hikes. “We saw two serious and acute risks to markets in the first half of this year – weakening corporate profits and falling real wages – as the Federal Reserve pressed ahead with the fastest rate-hiking cycle since the 1980s,” Haefele wrote. “But recently, the clouds have started to lift, with recession risks receding and the equity outlook more balanced.” The Fed is likely now done raising interest rates, and a majority of economists now expect the central bank to wait at least to the end of March before cutting them, according to a recent poll of top economists by the news agency Reuters.
Tech firm looks at direct listing on London’s bruised and battered stock exchange CHARLIE CONCHIE A COMPLIANCE tech firm which helps financial firms navigate regulation is plotting a move on to London Stock Exchange, in a boost to the City after a barren first six months of the year, according to reports.
RTOP, which runs a technology platform helping clients with regulatory compliance, is planning a direct listing on the London Stock Exchange, Sky News reported. A direct listing involves firms listing existing shares directly on the market rather than issuing any new shares.
The move is being overseen by RTOP’s Italian owner The Avantgarde group and was expected to value the firm at around £60m, Sky News’s Mark Kleinman first reported yesterday. The fresh listing comes amid a torrid time for London’s capital markets which have struggled to
attract new floats in a volatile 12 months on the public market. Just 18 firms floated in the first six months of 2023, raising £593m, as firms shelved IPO plans or opted to float overseas, according to data from EY. The downturn has prompted a period of soul searching in the
Square Mile as policymakers and lawmakers try and revive London’s appeal. A new float from a tech firm would be considered another small boon to efforts to boost the City after CAB Payments, a fintech payments firm, floated in early July.
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