A primary external driver of growth for Numis is the level of financial activity amoung the medium sized public companys that make up the Numis client base.
This year the level of IPO, merger and acquisition, and fund raising activity has been high, and Numis has profited.
This activity has been very dependent on the feel-good factor engendered by the rising stock market.
The market surmises that if stocks start to go down, managements will cease to have that feel good factor and will cease to consider fund raising for growth, aquisitions and the like. The market, probably correctly, predicts that Numis turnover and profit would suffer in such an environment.
Whether Numis gets back on an upward path depends on whether the market decides that the recent marketwide falls are natural profit taking and the upward trend will recommence shortly, or that the recent falls herald the top of the market for the next year or so.
I am hopeful that this is a temporary halt for natural profit taking. Merrill Lynch continue to predict 11,300 as the high for the DOW by the end of the year, and if that happens the London market will be encouraged higher again.
There are obviously also internal reasons for the success of this company, and I hope these will continue to work in our favour.
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