City Comment: No end in sight for volatility of recruiter shares
7 September 2012
Share prices in August built further on the rally that began at the end of the second quarter. Admittedly investors remain deeply risk averse, yet equities have drifted higher on desultory summer volumes – at times, it felt like there was no one in town to sell.
Fri, 7 Sep 2012 | Kean Marden, head of business services equity research, Jefferies International
Share prices in August built further on the rally that began at the end of the second quarter. Admittedly investors remain deeply risk averse, yet equities have drifted higher on desultory summer volumes – at times, it felt like there was no one in town to sell.
European markets gained on less faint hopes that the political will to maintain the common currency will be matched by European Central Bank action to stabilise sovereign debt markets. Over the Atlantic, it’s a sorry jobless recovery in the US when the market gets excited about 170,000 non-farm payrolls, but so it did in early August. And US housing starts also augured better activity ahead. The negative news of note came out of China, with fears of a hard landing exacerbated, and dragging down iron ore and other industrial commodity prices to boot.Recruiter shares have mostly drifted upwards by 2-3% over the past fortnight with Healthcare Locums rebounding by 19% from all-time lows. Conversely, Hays (-8%), Empresaria (-6%) and Robert Walters (-4%) declined, in part as investors fretted about the outlook for employment in Australia.
Australia is a theme worth exploring further as questions regarding the future of its labour market were prevalent throughout Hays’ preliminary results meeting with analysts. Recent developments in the important resources sector have not been positive: Xstrata has reduced the number of contractors in its coal business; BHP Billiton has shelved the Olympic Dam development; and an Australian minister was quoted as saying the resources boom was over.
To date, activity levels at Hays and Robert Walters have not been affected but our analysis of regional new job ads data suggests that we need to keep a close eye on momentum over the next few months.
There is a fragile line between optimism and pessimism among recruiter investors currently. Indeed, in the hour that it has taken me to write the text above, the European Central Bank president has announced an “unlimited bond purchase programme” which has clearly excited investors. Since typing the first paragraph, Hays has rebounded by 8% (its largest daily move in five months), Michael Page by 4% and many others by 2-3%. Sadly, this day-to-day volatility has been a persistent theme since 2007.
Share prices in August built further on the rally that began at the end of the second quarter. Admittedly investors remain deeply risk averse, yet equities have drifted higher on desultory summer volumes – at times, it felt like there was no one in town to sell.
European markets gained on less faint hopes that the political will to maintain the common currency will be matched by European Central Bank action to stabilise sovereign debt markets. Over the Atlantic, it’s a sorry jobless recovery in the US when the market gets excited about 170,000 non-farm payrolls, but so it did in early August. And US housing starts also augured better activity ahead. The negative news of note came out of China, with fears of a hard landing exacerbated, and dragging down iron ore and other industrial commodity prices to boot.Recruiter shares have mostly drifted upwards by 2-3% over the past fortnight with Healthcare Locums rebounding by 19% from all-time lows. Conversely, Hays (-8%), Empresaria (-6%) and Robert Walters (-4%) declined, in part as investors fretted about the outlook for employment in Australia.
Australia is a theme worth exploring further as questions regarding the future of its labour market were prevalent throughout Hays’ preliminary results meeting with analysts. Recent developments in the important resources sector have not been positive: Xstrata has reduced the number of contractors in its coal business; BHP Billiton has shelved the Olympic Dam development; and an Australian minister was quoted as saying the resources boom was over.
To date, activity levels at Hays and Robert Walters have not been affected but our analysis of regional new job ads data suggests that we need to keep a close eye on momentum over the next few months.
There is a fragile line between optimism and pessimism among recruiter investors currently. Indeed, in the hour that it has taken me to write the text above, the European Central Bank president has announced an “unlimited bond purchase programme” which has clearly excited investors. Since typing the first paragraph, Hays has rebounded by 8% (its largest daily move in five months), Michael Page by 4% and many others by 2-3%. Sadly, this day-to-day volatility has been a persistent theme since 2007.
