Both the primary (initial public offerings) and secondary (trading) portions of the UK equities market remain challenged, but that has not stopped Numis (NUM:AIM) and WH Ireland (WHI:AIM) producing strong performances.
The former pleased with this morning's upbeat year-end trading update, shares up 5.2% to 151p, while a robust performance from the latter's private client wealth management (PCWM) operations, prompted a 1.6% advance to 63.5p.
Latest statistics from the London Stock Exchange (LSE) – through which the bulk of UK equities secondary business continues to be executed via its SETS order book – suggest no let up in the difficult backcloth. UK order book trades in February were down 19.9% on last year and value traded off 14.2%.
Last month's sale by Seymour Pierce – one of the country's oldest stockbroking names – of the bulk of its assets was further evidence of the stress afflicting the sector. However, PCWMs are in a slightly different boat as their large back books of advisory and discretionary assets under management (AUM) produce a steady, reliable income stream.
Indeed, part of the reason WH Ireland reported such a strong performance – AUM up 27% in the year to 30 November 2012 to £1.7 billion – is because its superior financial position has allowed it to acquire struggling peers, including last month's purchase of Seymour's PCWM assets.
IPOs are picking up (see Shares cover story, 14 March) but there remains too many corporate brokers chasing a primary market unlikely to return to 2005/06's peaks. Numis stands out as a winner in this space, in particular it has been successful winning business in the mid market (FTSE 250 clients) as the bulge-bracket banks focus on repairing their balance sheets.
If the current equity market rally transpires to be sustainable then Numis could do very well as corporate activity recovers and the 'encouraging start' to 2013 reported today proves to be the start of a new, long-term trend.