Charles Stanley (CAY), the London stock broking firm has issued a profits warning as part of its trading update today. They blame this on costs associated with improving their services and their newer direct offering plus the poor performance of commission income caused by low transaction volumes. As a result they say barring a significant improvement in the markets, trading results will be materially below current market expectations.
As part of this warning seems to relate to low volume of trading by their clients there is a possible negative read through to other market activity reliant stocks such as their competitors Brewins (BRW) and Rathbones (RAT). However, given this may be something of a one off type of problem it might be worth looking out for buying opportunities if the shares are hit hard on the back of this. Similar concerns about current trading could also apply to other transaction related businesses such as IG Group (IGG) and PLUS 500 (PLUS).
Purer asset mangers such as Aberdeen (ADN), Henderson Group (HGG) and Jupiter (JUP) should be less exposed to this as they will gain from the markets on average remaining relatively high and stable plus possible benefits from increased NISA flows against an on going background of low interest rates. This latter benefit could also apply to and ultimately benefit the broking stocks mentioned above and help to offset the lower volume effects.