St James Place (LON: STJ) share price has been in a strong downtrend in the past two years as concerns about the company continued. After soaring to a record high of 1,585p in January 2022, the stock has dropped by over 56% to today’s 684p. The shares are hovering near their lowest level since May 2020.
STJ slow growth continues
St James Place is one of the biggest wealth management companies in the UK. According to its website, the company has over £157.5 billion in assets under management. It serves over 941k customers and over 4,760 advisors.
St James Place has faced numerous challenges in the past few years, which explains the weak stock price performance. Most recently, the firm suspended trading in its property fund as redemptions increased. Its unit trusts, life, and pension property funds have had over £530 million in withdrawals in the past 12 months.
St James is not the only fund manager seeing strong withdrawals in its property business. Companies like Blackrock (NYSE:BLK), Canada Life and M&G have done the same as property values dropped in a high-interest rates environment.
As a result, the company has moved in to change some parts of how it operates. Recently, it terminated its relationship with Somerset Capital, the company started by Jacob Rees Mogg after underperformance. As a result, Somerset announced that it would wind down its operations.
Further, the company has been affected by UK regulations, which have forced wealth managers to reduce their fees. These regulations on customer duty set higher standards for wealth managers and clearer standards for consumer protection.
The most recent results showed that St James Place gross inflows jumped by £8 billion in the first half of the year, down from £9.1 billion in the same period in 2022. Net inflows, which accommodate outflows, rose by £3.4 billion, also lower than £5.5 billion in the previous year.
Looking forward, I suspect that St James Place woes will continue for a while since the British economy is not doing well. The cost of living is still continuing while most analysts believe it will be one of the slowest economies in the developed market. There are also concerns about its future revenue and income growth after it slashed its fees.
St James Place share price forecast
STJ chart by TradingView
Turning to the weekly chart, we see that the STJ stock price has been in a freefall since 2022. During this period, the stock has consistently remained below the 50-week moving average. It has also dropped below the key support at 770p, the lowest swing in October 2020.
St James Place shares have formed a bearish flag pattern, which is characterised by a long line and a flag-like pattern. In most periods, this pattern is usually followed by a bearish breakout. Therefore, the outlook for the stock is bearish, with the next support point to watch will be at 596p.