Market Overview

Market Overview

We are pleased to supply the Monthly Market Overview for May. You will find, 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

May was a disappointing month for the stockmarket, with all the major indices falling back. The formation of a coalition government was what a lot of investors had dreaded, but in reality it has had little real effect on the market. However, it is clear that the new government will need to take drastic action to cut the budget deficit and increases in taxation and cuts in public spending will have a negative impact on the market. For many companies on AIM this could have quite an effect as many are focused totally on the domestic economy with little exposure to overseas markets. However, given the fact that the FTSE AIM All Share Index stands a long way below the 1200 level reached in the summer of 2007, some of this is already accounted for in share prices.

Only two companies joined AIM during the month, although this is hardly surprising given the uncertainty leading up to the General Election. Yet again, more companies left AIM than joined with 11 companies having their AIM listing cancelled. The Falkland Islands remain a focus for investors with the four main companies exploring for oil in the region all seeing considerable activity. Rockhopper Exploration and Desire Petroleum were the two most actively traded stocks during the month with the former seeing a remarkable 35,360 bargains during the month as over £300m of stock was traded. The shares started the month at 42.5p and a month later, on 28 May, the share price had shot up to 262p! Although nowhere near as dramatic, shares in Desire also moved sharply higher, almost doubling as they rose from 45.5p to 89p. Borders & Southern

Petroleum and Falkland Oil & Gas saw lower trading volumes, they also saw more than useful share price increases. Whilst some investors may look at companies such as these to avoid being dependent on the UK economy, it is not all bad news. Many companies languish with low share prices, thus making them susceptible to takeover approaches and companies such as Inspired Gaming and Melorio have received bids recently. This does show that for investors who are prepared to do some research, AIM can throw up some hidden gems.

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