Recruitment and trading slows ahead of festivities - City Comment
28 November 2013
Christmas feels like it has arrived early this year, perhaps because even I have managed to buy my gifts well in advance for change.
Thu, 28 Nov 2013 | By Kean Marden, head of business services equity research, Jefferies InternationalChristmas feels like it has arrived early this year, perhaps because even I have managed to buy my gifts well in advance for change.
On the equity markets, trading volumes have slowed in recent weeks and are unlikely to revive as we move through Thanksgiving week in the US and enter a traditionally quiet December. Investors have prospered during 2013 and most seem content to lock in their gains for the year. With this in mind, maybe it isn’t surprising that the FTSE100 index has been almost exactly flat over the past two weeks.
Hays provided the major news event of the month when they hosted a seminar for analysts and investors. The last one took place three years ago but this was well worth the wait – comprehensive, a great format and very slick.
The company outlined a pathway to “broadly doubling” operating profits (to c£250m) driven by UK recovery, continued strong growth in Germany, Australian stability, and a more meaningful contribution from France, Canada, Japan and Brazil.
In addition, we noted several encouraging signs that point towards further recovery in UK labour markets. Some public sector framework agreements are starting to unravel as recruiters refuse to place scarce candidates at low-fee rates, and higher-quality perm candidates are contacting Hays ahead of new employer hiring budgets in 2014.
The share price leader board this month is headed by Impellam (+6%) and Kelly (+6%). Main decliners include Staffline (-11%), following a broker recommendation downgrade from buy to hold, and SThree (-3%).
At one point, SThree’s shares had pulled back by 15% since the start of November, which has created some nervousness that its trading statement next Friday will disappoint. There are also rumours that Sunil Wickremeratne (who retired as chief operating officer in 2011) has been selling part of his shareholding. Wickremeratne was a major (10%+) shareholder in SThree and sold shares in February and August.
As an encouraging 2013 starts to draw to a close, history suggests that the stock market should end on a high note. The FTSE100 index delivered positive returns in December in 24 of the 28 years between 1984 and 2012, with a 3% average rally over the past decade.
Merry Christmas to you all and, if new opportunities await you in 2014, a prosperous New Year.
On the equity markets, trading volumes have slowed in recent weeks and are unlikely to revive as we move through Thanksgiving week in the US and enter a traditionally quiet December. Investors have prospered during 2013 and most seem content to lock in their gains for the year. With this in mind, maybe it isn’t surprising that the FTSE100 index has been almost exactly flat over the past two weeks.
Hays provided the major news event of the month when they hosted a seminar for analysts and investors. The last one took place three years ago but this was well worth the wait – comprehensive, a great format and very slick.
The company outlined a pathway to “broadly doubling” operating profits (to c£250m) driven by UK recovery, continued strong growth in Germany, Australian stability, and a more meaningful contribution from France, Canada, Japan and Brazil.
In addition, we noted several encouraging signs that point towards further recovery in UK labour markets. Some public sector framework agreements are starting to unravel as recruiters refuse to place scarce candidates at low-fee rates, and higher-quality perm candidates are contacting Hays ahead of new employer hiring budgets in 2014.
The share price leader board this month is headed by Impellam (+6%) and Kelly (+6%). Main decliners include Staffline (-11%), following a broker recommendation downgrade from buy to hold, and SThree (-3%).
At one point, SThree’s shares had pulled back by 15% since the start of November, which has created some nervousness that its trading statement next Friday will disappoint. There are also rumours that Sunil Wickremeratne (who retired as chief operating officer in 2011) has been selling part of his shareholding. Wickremeratne was a major (10%+) shareholder in SThree and sold shares in February and August.
As an encouraging 2013 starts to draw to a close, history suggests that the stock market should end on a high note. The FTSE100 index delivered positive returns in December in 24 of the 28 years between 1984 and 2012, with a 3% average rally over the past decade.
Merry Christmas to you all and, if new opportunities await you in 2014, a prosperous New Year.
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