Investec Market Review August 2023

• UK equities slid in August - the FTSE All-Share fell by (2.9%) - following a number of disappointing economic readings and a seasonally quieter market.
  
  
• 20 of 23 sectors registered negative performance in August, with Industrial Engineering and Leisure Goods as the weakest sectors, and Tech Hardware and Equipment performing strongest.
  
  
• ECM activity continued to decline, by both volume and value compared to July.
  
  
• UK public M&A quietened down significantly in August with only four deals announced in the month.

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Economic headlines in August

• UK inflation continued to decrease coming at 6.8% (Y/Y) in July as gas and electricity prices dropped.
  
• Bank of England raised the Bank Rate from 5.00% to 5.25%, the highest level in 15 years.
  
• RICS house price balance feel to a net balance of -53% in July, the lowest level since Great Financial Crisis.
  
• UK composite PMI fell from 50.8 in July to 47.9 in August, a sizeable miss on expatiations for 50.3 and marked a 31-month low.
  
• Eurozone Services PMI fell from 50.9 in July to 48.3 in August, entering contraction territory.
  
• US inflation increased slightly to 3.3% (Y/Y) in July from 3.0% (Y/Y) in June.

UK markets continue to lag behind European and US peers

Source: Bloomberg, FactSet, Macrobond, Calastone, Investec Economics
 

Outflows exacerbated over the summer

Source: Bloomberg, FactSet, Macrobond, Calastone, Investec Economics

MPC has a long road ahead when it comes to inflation

Source: Bloomberg, FactSet, Macrobond, Calastone, Investec Economics

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Monthly sector snapshot

Drivers of sector performance in August

• Aerospace & Defence stocks continued their rally in August and posted another month of significant gains. BAE Systems share price increased by c.8.3% as it announced the acquisition of the aerospace of Ball Corporation for c.$5.6bn.
• Despite an impressive performance in August, Tech Hardware and Equipment stocks continue to be among the worst performers year-to-date having been heavily impacted by high interest rates and rising inflation.
• Oil prices continue to be a tailwind for Oil & Gas Producers. Prices rose throughout August, with the WTI benchmark up c. 17% over the last three months.

Sector performance (Year to date)

Source: FactSet, Financial Times, Investegate, ONS, Investec Economics

Sector performance (August 2023)

Source: FactSet, Financial Times, Investegate, ONS, Investec Economics

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ECM activity snapshot

Primary ECM issuance across the deal size spectrum in August

Public equity fund-raises by sector and highlighted deals

Selldowns

Announced IPOs in August 2023

Source: Source: Dealogic. Analysis and commentary only includes transactions greater or equal to £5m, and only includes transactions involving an issue of new shares i.e. primary share issuances.

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UK Public M&A activity in August

2023's scorecard

Selected deals

Source: Company announcements, FactSet, Practical Law

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