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Voice broking? Or digital trading in over-the-counter markets? Anyone looking for a clue as to where City legend Michael Spencer sees the future has not had to look very hard, writes Matthew Vincent.
After selling off the global voice broking business of ICAP, the business he founded, to Tullett Prebon for £1.2bn in an all-share deal, he then immediately sold almost all of his shares in that business within days of receiving them, and has sunk around £1m into the business he retained – electronic trading operation Nex Group – in recent months.
This morning, the reason for all his dealing became even clearer: Nex Group reported an 11 per cent rise in third quarter revenues, driven by 15 per ent growth in the Nex Markets division. And Mr Spencer said it was all thanks to his decision – and that of the American people – last year:
30 December 2016 was a momentous and exciting day as we completed the disposal of our Global Broking business and officially launched Nex Group,” he told investors. “After Trump’s election victory we benefited from an increase in trading activity as market participants considered the impact of potential policy changes on bond and foreign exchange markets. Both of our electronic platforms, BrokerTec and EBS, performed robustly under heightened volumes, providing our customers with non-stop access to liquidity.
But he is not counting on the Trump effect lasting. “It is still too early to assume with any confidence that the previous and prolonged period of subdued market conditions has come to a permanent end,” he warned. “Indeed volumes in January were generally more muted.
Still, he has put his money where his mouth is – again – acquiring Abide Financial, to add new services for customers.
Hargreaves Services, the UK’s largest remaining producer and supplier of coal, was never going to have quite so good a year. In fact, last February it was so gloomy that it issued a profit warning for both last year and this one – having foreseen long-term cost pressures on
domestic power and steel markets.
This morning, in its half year results, it revealed how challenging the last six months have been: continuing operating profit fell 98 per cent to £0.1m, while underlying operating profit fell 49 per cent to £2.1m. And this was “in line with management expectations.”
This was partly due to lower levels of thermal coal being traded and a £26.7m reduction in metallurgical coal sales following the closure of the Redcar steelworks – a move that led Hargreaves to exit metallurgical coal trading in the UK, and focus on speciality markets.
It now says its UK strategy “remains focused on growing outside of our traditional coal and steel sectors”. Sensible move.
Finally, defence contractor Qinetiq has brought new meaning to concept of hitting challenging targets. In December, it bought a weapons target practice business from Meggitt, for £57.5m in cash. This unit supplies targets for live-fire training and testing of
weapons systems to about 40 armed forces around the world.
And this morning, it said it has made “encouraging progress” in the implementation of its strategy to drive future growth. It also reported a £1bn amendment to its Long Term Partnering Agreement (LTPA) with the UK Ministry of Defence which commits approximately half of the core revenues under the agreement until 31 March 2028.
Have a productive day.