July Market Overview

July Market Overview

We are pleased to supply the Monthly Market Overview for July. You will find, as well as a brief comment on the market, the top 25 most actively traded securities, figures for the turnover by sector, top 25 Aim companies by market cap, distribution of equity and finally admissions and cancellations.

The AIM market had a very disappointing July, with the FTSE AIM All-Share Index falling by 14.3% to 823.35. This follows the poor performance of AIM stocks in June and highlights the flight to quality which has seen investors flee from higher risk stocks to larger companies. Even the largest company on AIM, Sibir Energy, has been badly hit, with its market cap falling to £2.4bn from over £3bn at the end of June.

Apart from the overall weakness of the market, another factor deterring investors from investing is the increased amount of volatility on AIM. Many commentators have referred in recent months to the fact that the London stockmarket has become volatile due to the increasingly important role played by hedge funds. Although the activity of these funds is generally limited to larger companies, AIM stocks too have become more volatile. The fall in the overall market has led to a reduction in trading volumes, not helped by the fact that many people are away on holiday and this is reflected in the fact that the value of stocks traded on AIM during July has fallen to £4.5bn from £5.5bn in June. Lower volumes of trading on AIM have meant that share price spreads have widened with marketmakers reluctant to take risks by taking stock onto their book or selling shares which they do not hold. And, until there is some evidence that confidence is returning to the market, this situation of low volumes and increased volatility seems likely to continue.

Last month saw two of AIM’s better known stocks move up to the main list. Spice, which services utility companies, saw its share price move up from 115p at the time of flotation in August 2004 to around 550p, where it is capitalised at over £330m. Synergy Healthcare, which supplies hospitals and the healthcare industry, also moved up as its market cap rose to over £440m. Although it is disappointing for these companies to be lost to AIM, it is important to remember that both companies have benefited greatly from being on AIM in the early stages of their development and these are textbook examples of how AIM should work.

The full Market Overview for July, which includes more detailed facts and figures is available to download below. We hope you find this information useful and gladly appreciate any comments or feedback.

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