Skip to main navigation or content
Hydrogen shares have plummeted after the recruitment company warned that trading conditions in the investment banking market were becoming increasingly challenging, and said that first half and full year pre-tax profits were likely to be below those achieved last year. The market responded to the news by sending its shares down 27 per cent.
Advertising
Hydrogen’s City focus has put it at the sharp end of the economic slowdown. About 20 per cent of its net fee income is generated from investment banking.
And there are increasing signs that the slowdown in recruitment is getting worse as well as spreading beyond the City. Last week’s widely followed Report on Jobs from KPMG and the Recruitment and Employment Confederation reported another contraction in the permanent job market as well as a drop in demand, which is regarded as an indicator of future trends. Growth in demand for temporary workers also dropped back. Employers usually hire more temporary staff in uncertain times, so slowing demand in this area, along with falling permanent placements, suggests that tough conditions could be really biting.
The survey not only pointed to weakening conditions for accounting & finance placements but slowing in demand growth for IT & computing staff and executive & professional workers. The latest PMI figures for the service sector added to the gloom as they showed a contraction in the sector in May.
Given the sensitivity of recruiters’ profits to falling job market activity and the speed at which a trading deterioration tends to set in, it is not surprising the market is jittery. There could be more warnings to come in the not too distant future. That said, the UK’s largest recruitment companies have diversified geographically into markets that look more promising than the UK, such as continental Europe and Asia. That should help to shore up performance.
Given the likelihood that there is more bad news to come from the sector, fishing for value now looks dangerous. Companies that chiefly have exposure to the UK and US, and that have debt, look particularly risky. At 143p Hydrogen shares are high enough and we’re also wary of Impellam, which is high enough at 88p.
The UK’s No.1 Stockbroker
Access a selection of share tips, comprehensive company analysis and full financial data on listed companies. Plus portfolio tools with advanced alerts when you register for free here.
Advertorial Feature
With so many big moves in the world's financial markets, there have seldom been more opportunities around for spread traders. Isn't it time you joined them?
by Dominic Piccarda
© The Financial Times Limited 2008. All rights reserved. "Investors Chronicle", "FT" and "Financial Times" are trademarks of The Financial Times Limited. No part of these web pages may be reproduced or transmitted to or stored in any other website or other form of electronic retrieval system, without prior permission in writing from the editor.
Warning: Do remember, particularly if you are new to stock market investment that the prices of shares and other investments can fall sharply. You may not get back the money you originally invested. The material here is for general information only and is not intended to be relied upon for individual investment decisions. Take independent advice before making such decisions. This site is aimed at UK residents only. To read more please see our Important Warning
-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
