The London Stock Exchange is set for a dire start to the year amid warnings there will be few mergers and takeovers until spring at the earliest.
The first three months of 2023 are expected to be ‘subdued’ as economic concerns – such as uncertainty over further interest rate rises – deter investors, according to brokers at the investment bank Peel Hunt.
But a period of ‘relative political stability’, as well as clarity over rates and inflation, could see deal-making return before the summer.
Jitters: The London Stock Exchange is set for a dire start to the year
British companies are still good targets for overseas investors and private equity firms later in the year, said Michael Nicholson, head of mergers and acquisitions at Peel Hunt.
‘Absent an unexpected shock, we expect to see a more widespread recovery,’ he added.
London is already in the midst of a downturn after the number of big mergers and acquisitions slumped in 2022.
There were 49 bids for London-listed firms last year, according to analysis from investment platform AJ Bell, compared with 82 in 2021.
In its annual report on takeovers, Peel Hunt said British companies were less likely to take risks when buying competitors. For example, they may avoid doing deals that would see them entering new countries or selling new products for the first time.
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