Brokers make hay in first half
ALTHOUGH the London stock market has taken a step back recently from an assault on its record highs, there is plenty of evidence that brokers have benefited from a buoyant first-half performance with updates from two City firms adding to that picture.
Cenkos Securities, the AIM-listed broker focused on UK small and mid-cap companies, revealed that it made more money in the first half of the year than it did in the whole of 2013, driven by deal-making as well as strong share trading.
The company reported a pre-tax profit of £10.7m for 2013, up 53pc year-on-year.
Meanwhile WH Ireland, which provides corporate broking and private wealth management services, said revenue growth in both its divisions had been encouraging in the half year to May 31, and profit before tax after reorganisation costs would be ahead of a year ago.
As both brokers unveiled the fruits of revived investor interest in the stock market, particularly helped by the flurry of new issues, their own share prices pushed higher. WH Ireland added 4.5p to 113.5p and Cenkos jumped 13.5p higher to 217p.
Cenkos single-handedly arranged the £1.4bn flotation of motoring services group AA, a deal which boosted the broker’s firsthalf revenues by around £30m.
However, conditional trading in AA shares began rather lamely, ending on their debut at 232p against an offer price of 250p.
Other recent new issues also gave up ground, with lender TSB – which was spun off from Lloyds Banking Group (down 1.25p at 75.45p) last week – unchanged at 290p after posting strong gains on its debut on Friday versus a 260p offer price.
And house-hunting website Zoopla was a touch lower on its first day of unconditional trading following last week’s flotation, shed- ding 2p to 229p. The poor showing for new issues came as the FTSE 100 index closed 24.64 points lower at 6800.56, with other European bourses also retreating as a recent rally appeared to have run out of steam once again. The FTSE 250 index shouldered bigger falls, losing 116.11 points at 15,675.31.
The decline came as oil prices continued to rise, driven by supply concerns after US president Barack Obama warned that the crisis in Iraq could spill over into other neighbouring regions. Insurgents captured border crossings to Syria and Jordan after continued fighting on Sunday.
Metal prices were also higher after the latest manufacturing figures from China, the world’s second largest economy, revived hopes that recent stimulus measures by the government was starting to have a positive impact on growth.
The China data gave a boost to blue-chip miners, with Rio Tinto 49.5p higher at 3127p and BHP Billiton up 36.5p to 1938p.
But among the fallers, housebuilders were under pressure again on expectations that the Bank of England will announce new rules this week to clamp down on large and risky mortgage loans. Mid cap Barratt Developments fell 9.8p to 350.8p and top flight rival
Persimmon dropped 14p to 1216p. Travel stocks suffered on fuel costs worries as oil rose to over $115 dollars a barrel with discount carrier EasyJet down 29p at 1423p and tour operator TUI Travel off 3.3p at 384.2p. Away from the big boys, small cap Environ
mental Recycling Technologies, which has a system capable of converting waste plastics into commercially viable products, has secured what it termed ‘ a first milestone order’ for barge covers from its US licensee Brown Water Plastics worth ‘significantly in excess’ of £1m. Shares jumped more than 11pc, up 0.05p to 0.5p.
Also on demand after a deal was smart metering specialist Cyan, which saw its shares gain 5pc, or 0.01p, to 0.21p, after mobile telecommunications giant Vodafone picked it as a partner in India.
Software and consultancy Castleton Technology moved 0.12p higher to 1.08p, up by nearly a quarter after acquiring Dorkingbased Montal, which provides IT services for small businesses, for £3.8m.
But on the downside, telecoms components maker Filtronic dropped 27pc, or 10.75p to 28p, after it said it expects to post a loss of £500,000 this year and that its 2015 performance ‘will be considerably lower than market expectations’ due to delays to a number of large projects caused by the introduction of 4G technology.
And shares in Africa-focused coal miner Beacon Hill fell more than 40pc, or 0.28p to 0.42p, after the company raised £1.5m via a placing of new shares at 0.25p each.
The cash will be used to tide Beacon over as it seeks to expand capacity at its Minas Moatize mine in Mozambique.