MARKET WATCH
New Year, new horizons
EHN’s financial analyst, Nick Spoliar of WH Ireland, looks ahead to 2020 and considers our industry’s prospects from a City perspective.
From my desk in the City of London, the view is of empty, sunlit offices in refit mode, which seems appropriate as January 2020 feels more like the start of a new play than another act in the old one.
The December PMI manufacturing and construction indices, released on 3 January, signalled economic contraction. And the Financial Times welcomed the New Year with a gloomy survey of economists. However, company directors’ confidence has soared since the general election (Source: Institute of Directors), and the forward- looking PMI for construction sector managers hit a nine-month high in confidence.
Who is right? Early doors yet, but we take heart from the first market major to provide an update, Johnson Service Group, which reported a strong 2019 on 3 January, despite a weak backdrop, and is doubtless looking forward to even greater things in the coming year.
And the equity markets, of course, have been buoyant, with the FTSE ‘all’ up some 5-10% since the election, the bigger risers being in the more UK-centric smaller stocks and UK-centred sectors (with less translation risk on exchange rates).
Fly in the ointment
What is the fly in ointment? Anyone can busk on this subject, but how about: (1) the Brexit trade deal - what will it be? What can be done in eleven months? (2) The trade war (US and China) - what next? And (3) the war war - following the assassination in
13
Baghdad which has kicked off the new decade in a surprisingly anarchic style.
Assuming the worst predictions are missed, we will be looking for a productive year for the rental sector. As a late Christmas present, Speedy Hire has been tipped as one of the eight stocks of the year in Investors Chronicle in the first week in January. Back in November, HSS reported a solid start to their Q4 - no new news there until probably the results in March/April.
Assuming the gloomiest predictions are missed, the City anticipates a productive outlook for the rental sector this year.
How about Vp? The shares closed the year well above the CMA- induced lows seen in late spring/early summer - a tribute to consistent long- term operational performance and a respected management team. Northbridge
Industrial shares (see Market Watch, July/August) rallied strongly by >20% during December, closing the year at over 140p.
At WH Ireland, we raised money in both the public and the private markets in 2019… however, looking at the big picture, 2019 was a terrible year for IPOs (fund-raisings). The City will be glad to see the back of it - and looks for a better year to come.
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WH Ireland disclaimer: WH Ireland states that this is not an offer or a solicitation to buy or sell any security. Please refer
to
http://research.whirelandplc.com/research/
regulatory.asp and
http://research.whirelandplc.com/research/
conflicts_of_interest.asp for WH Ireland’s research disclosure and disclaimers and conflict management policy regarding Non-Independent Research. WH Ireland Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register number: 140773)
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