APRIL MARKET OVERVIEW

APRIL MARKET OVERVIEW

We are pleased to supply the Monthly Market Overview for April. You will find, as well as a brief comment on the market, the Top 25 Most Actively Traded Securities, figures for Turnover by Sector, Top 25 Aim Companies by Market Capitalisation, Distribution of Equity and finally Admissions and Cancellations.

Market Comment
The improving performance of AIM stocks has continued through April with an increase of 16.2% being recorded by the FTSE AIM All Share Index.  This is the second month running that the Index has risen and also the second month running that the Index has outperformed both the FTSE 100 Share Index and the FTSE All Share Index. 

As we have stated before, there appears to have been a significant change in the way that company results are now being received, with many companies seeing sharp increases in their share price on the back of good news.  This is in contrast to last year when share prices were in freefall almost regardless of what news was reported. 

One disappointing feature of AIM over the last few weeks, however, has been the number of companies which have been delisting from the market.  These include companies such as Metnor and GSH Group.  The former is a property development and construction group in which the controlling family had a 76% stake.  As this exceeded the 75% threshold which was required to take the company private there was nothing that the minority shareholders could do to stop it.  Clearly most of these minority shareholders did not wish to own shares in a privately-owned company resulting in a flurry of sales and a collapse in the share price. 

The delisting of companies from AIM in this way has resulted in a considerable amount of negative publicity for the Stock Exchange’s junior market and has created something of a chicken and egg situation.  Companies are delisting for a number of reasons – the cost of maintaining the listing, what they perceive to be undervaluation of their company by the market and a lack of interest from investors resulting in few transactions being carried out in their shares.  On the other hand, there are also a number of reasons why investors are reluctant to invest in AIM stocks.  These include a lack of research on the companies quoted on it; fears that the companies could delist if there is a large controlling shareholder; a lack of liquidity in the company’s shares and so on.  Clearly these points are linked – if more investors showed interest and bought shares the value of the relevant company would increase and this would also create liquidity in the company’s shares.  In turn, an increase in trading would also encourage more research on companies on AIM!

The surge in the FTSE AIM All Share over the last two months during which it has risen by 23.3% shows that the market is very much alive and kicking.  Many analysts believe that this part of the stockmarket is where the real value is to be found and there are a large number of very undervalued companies on AIM.  However, as always, it will be those companies that are proactive in their financial public relations which will attract the interest of investors and it seems likely that it will be those companies which will see renewed interest in their shares. 

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