Peel Hunt Ltd (AIM:PEEL) has thrown some weight behind Chancellor Rachel Reeves’ Budget, arguing that measures to nudge more investment into UK equities could help revive London’s capital markets.
The firm said the package provides clearer ground for companies and investors after months of speculation, and creates more wriggle room within the Chancellor’s fiscal rules. The shares rose 1.9% to 107p on Monday.
The investment bank welcomed the temporary removal of stamp duty on shares bought in newly listed companies and the overhaul of individual savings accounts, which will require savers to put at least £8,000 of the £20,000 annual allowance into stocks rather than cash.
It also pointed to a three-year stamp duty holiday on initial public offerings as a potential catalyst for bringing more high-growth firms to market.
These moves come as Reeves faces criticism for talking up the scale of the fiscal challenge before unveiling £26 billion of tax rises, including a 2 percentage point increase in dividend tax next year, which some warn cuts across her ambition to boost retail investing.
Peel Hunt noted that London’s listing market has shown early signs of life, with recent flotations from The Beauty Tech Group, Shawbrook and Princes, and said dealmaking has remained brisk.
Its own half-year results underline that message. Pre-tax profits jumped to £11.5 million in the six months to September, up from £1.2 million a year earlier, on the back of a 38% rise in revenue and ongoing cost reductions that have trimmed the workforce by nearly a tenth.
Keefe, Bruyette & Woods (KBW) said the numbers were much stronger than expected.
Peel Hunt delivered adjusted pre-tax profit of £14 million in the half, double KBW’s forecast and ahead of its previous estimate for the full year.
Revenue of £74 million matched earlier guidance, but operating costs came in 10% lower than KBW had modelled, demonstrating what the broker described as “impressive operational gearing”.
Execution and trading activity was the standout, with income up 57% year on year and back to levels last seen in 2021.
KBW said the second half has begun well, though it cautioned that the recovery in activity remains delicate.
Even so, it reiterated an 'outperform' rating and raised its price target to 130p, arguing that Peel Hunt offers a relatively pure way to play a rebound in UK investment banking, with current valuations not reflecting meaningful improvement.