Peel Hunt: UK stock market held back by ‘lack of self esteem’
The boss of City broker Peel Hunt has said London markets are being held back by a “domestic lack of self esteem”.
Steven Fine, Peel Hunt’s chief executive, told Morning Wire the UK believes it is in “a lot worse shape than the rest of the world does,” which has led to a cheapening of assets.
He cited the sentiment downturn in the UK as coming from the top.
The average tenure of a UK public company chief executive is 3.7 years, according to Peel Hunt, and Fine noted that this period coincided with the onset of a dire economic outlook.
“All this sort of downturn started at the end of 2021… it was gas prices, then it was inflation, then it was Truss, and it was everything else that went with it.”
Turning economic buffer into a springboard
The investment bank sounded the alarm on the “increasing rate” in which companies were ditching the London market in its financial results on Monday and the “significant challenge” it presented for the UK economy.
But Fine said the UK “weathered the storm better than most people would think” even as company bosses battled a bleaker economic battleground.
Peel Hunt maintained a steady level of clients in the last year at 147, only a marginal dip from 150 the previous year. Of the clients, five were FTSE 100 firms and 47 FTSE 250.
“The economy has actually been a very strong buffer against all of these shocks, which we don’t give ourselves enough credit for.”
Fine called for turning the “buffer into a springboard,” allowing company bosses to move “from the backfoot slightly further forward.”
“Can we sort of banish this lack of self esteem and gain a bit of confidence, political situation notwithstanding?”
Bargain Britain a target for overseas firms
Fine’s calls followed a week that included a tirade of foreign firms swooping in for bargain UK assets.
“Given the desire for domestic growth and the desire to look at UK productive assets, why do we allow overseas firms to take advantage of mispriced assets that are here?” he said.
A trio of tech takeovers kicked off last week, with US giants and private equity firms snapping up London talent, in transactions that could top £6.3bn.
Fine said domestic companies are “more concerned about being vulnerable than concerned about what they could do.”
Peel Hunt posted a £3.5m loss for the latest financial year after restructuring costs took a chunk out of the firm’s bottom line.
However, the broker noted that the new financial year had begun on a positive note, despite President Donald Trump’s tariff onslaught.
Fine noted a departure from US assets leading to “excess concentration” providing a positive “potential for change and impact” on the UK.
President Donald Trump’s ‘Liberation Day’ levies sent global markets into a tailspin and US assets felt the squeeze as investors flocked away from Wall Street.
But Fine said this fared well for UK stocks with FTSE 100 darlings BA, Babcock and Chemring all up over 60 per cent since the beginning of the year.