Nervous investors dent St James's Place

Wealthy investors are deserting the stock market, sending sales at upmarket St James's Place Capital slumping by one-fifth in the first quarter of 2003.

The wealth manager's new business sales fell 22 per cent last year. In the first three months of this year, sales of pensions were the hardest hit, falling 25 per cent against the same period last year, while investment sales dropped 21 per cent.

St James's Place, which is majority-owned by British bank HBOS, said new business from long-term savings in the UK had continued to reflect the stock market uncertainty. Its shares fell 7 per cent to 96.5p.

However, the company attempted to strike an upbeat note about its ability to bounce back. "We remain confident that marketing in a wide range of best of breed products and services ... puts us in a strong position to benefit from a recovery in market sentiment," the company said.

Investment houses have across the board reported a downturn in new business, as investors from the modest to the high net worth end of the spectrum have retreated from equity investments after three years of falling stock markets.

Mike Wilson, chief executive of St James's Place, said the company's drop in new business compared favourably with the first-quarter declines of 26 per cent at Aviva and 32 per cent at Prudential on equivalent products.

Legal & General, the UK's third-largest insurer, which focuses on low-cost products, has been one of few investment companies to weather the downturn well. While it said on Wednesday that sales had slipped 4 per cent in the first three months, its record in its domestic market has been far more robust than those of its main rivals.