Times are fast getting leaner for the brokers

One was amused particularly to see Landisbanki, the Icelandic firm with seemingly bottomless pockets, which splashed out £70 million on Teather & Greenwood and £60 million on Bridgewell, in neither case getting very much to show for it, seeming to want a chunk of Close Brothers - presumably to make it three in a row and get a bonus mark.

In this case, though, discretion does appear eventually to have been the better part of valour. The outlook for any business specialising in mid-market mergers, acquisitions and capital-raising must be bleak. Look at the figures for AIM flotations - the bread-andbutter business for Close and many firms like it. There were almost 500 AIM listings in the record year of 2006 but that number halved last year and could again have, or worse, this time.

Close has a wide range of businesses, much wider than a focus on AIM - but all come back in the end to the level of confidence and activity in the City. And there is gloom in most of these too. Fund management is suffering, as we have seen from New Star, from industrywide figures and from most groups except Foreign & Colonial.

Winterflood, seen as one of the jewels, is the biggest market-maker in midcap stocks but all this electronic competition means narrower bid-offer spreads every year, which leads to an ever-tougher operating environment. And when was a market-maker ever a bear-market stock?

Look, too, at the level of mid-market bid activity - or lack of it. The expectation was that with private equity retreating to its tent, corporate bidders would return to the fray. But after an early flurry, the activity levels are disappointing - with one leading practitioner telling me the volatility of the markets and the savagery with which shares were marked down when companies delivered a surprise were putting a lot of bidders off.

Boards are afraid that if they launch a bid, their share price will be trashed and they still won't get the prize - a bit like Standard Life found after its illconceived and even more ill-executed tilt at Resolution last year. Its shares are down 40%from their peak of last summer.

This is, of course, much more than a Close Brothers problem, for the midmarket space is also hugely competitive. There's Hawkpoint, whose David Reid Scott gulled Terry Smith at Collins Stewart into paying top dollar to buy it at the top of the market a year ago; there is Numis, Evolution, Oriel, the Icelanders, Panmure Gordon, KBC Peel Hunt - indeed there are almost 80 firms with an AIM licence, such have been the start-ups and new entrants in recent years. They all face desperately lean times, and too many have a cost base that reflects the receding bull market, not the chill winds they face now.

Indeed, of the major names only Evolution stands out as exceptionally wellpositioned for the coming downturn, having a hugely strong balance sheet and, in Williams de Broë, a business that despite the climate has successfully increased funds under management, and has even more ambitious targets.

Just as well chief executive Alex Snow stood up to those shareholders who spent much of last year trying to force him to return the cash and gear up. Don't write off Numis either - as Oliver Hemsley's business is also wellpositioned to mop up disaffected teams in the downturn, the better to bounce back when markets pick up.

IF the Chinese raid to buy more than 10% of the shares of Rio Tinto did come as a surprise to the investment community, it clearly has not been paying attention.

I forecast before Christmas that if BHP Billiton persisted with a bid, the avowed purpose of which was to gain control of 40% of the world's iron ore, the Chinese as the major customer for the ore would be left with no choice but to try to thwart the deal.

In an ideal world, there would be a global Competition Commission with the power to block such an outrageous attempt by producers to secure a monopoly, but as we are nowhere near getting one, the Chinese understandably decided to defend their interests.

They have the resources, of course, to make a full bid for Rio, and they might be forced into that, though I doubt it is what they want. They are all too conscious that such a move could provoke a political backlash. Rather, they want to secure the status quo - and they have probably already done enough to achieve that.