AUGUST MARKET OVERVIEW

AUGUST MARKET OVERVIEW

We are pleased to supply the Monthly Market Overview for August. 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

All three indices made good progress during August, with the FTSE AIM All Share Index having the strongest run of the three and ending the month up 9.4% at 524.65. The FTSE 100 improved by 6.5% ending at 4,908.90 and FTSE All Share ended positively as well, up 7.1% at 2,520.66. The AIM market has not only shown a decent level of recovery since its low in March this year but has proved to be a very good investment for those that have chosen to spread their money over a portfolio or those that have managed to stock pick wisely.

The market generally has seen a powerful surge in August and the FTSE 100 looks set to break the psychologically
important level of 5,000. The momentum has been influenced by a number of factors. Better than expected corporate
earnings in the second quarter of the year; a recovery in the oil price which has benefitted oil majors such as BP but also many smaller speculative oil companies on the AIM market; good results from banks and insurance companies; signs that housing markets are recovering in both the UK and US and so on. Some would lead us to believe that the green shoots of recovery are all around us!

What is clearly apparent is the general change in investor mood and confidence. In the past months we have commented that all financial news was being taken badly and now it seems the reverse is happening. For example, news that
quantitative easing was set to increase saw the markets run ahead and the fact that interest rates are set to remain low was seen as a bullish statement. Six months ago both of these statements would probably have seen investors
running.  The question is, are we now in the early stages of a bull rally or is the rally set to run out of steam?

September and October can often be difficult times for investors and after the strong run seen in the market over the last few weeks we would not be surprised to see some short-term profit-taking.

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