November Market Overview

November Market Overview

We are pleased to supply the Monthly Market Overview for November 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 decline in equity markets slowed down in November although all major markets continued to fall further. Single digit declines were seen in all three indices shown above and once again the FTSE AIM All Share performed the worst of the three with a drop of 9.4% to 402.73 points. The fall in the FTSE AIM All Share Index over the last 3 months (September, October and November) is 50% and taking a view by looking back to 30 November 2007 the Index has fallen from 1,053.40, a drop of over 60%.

Although the performance of stocks on AIM has clearly been very disappointing, the main reason for the fall in share prices has been the move away from more risky shares into either blue chip stocks or alternative investments – normally cash! The result of what has often been indiscriminate selling has been that many companies on AIM now look very cheap. Having said that, there is little reason for share prices in AIM to move up in the short term as it will take a significant recovery in confidence for this to be achieved. For those investors who are brave enough to buy now and who are prepared to be patient though there are clearly bargains to be had.

A typical example of this is Intelek. The company is a designer and manufacturer of electronic systems for satellite and microwave communications as well as being a specialist manufacturer for the aerospace market. The group’s most recent results, which cover the six months to 30 September revealed strong growth in both profits and earnings per share. Despite that, and the fact that the second half of the financial year has begun well, the shares which are currently priced at 14.5p, stand on a very low p/e ratio of just 4.5p assuming full year earnings per share of 3.2p. This seems ridiculously low and there is every chance that these shares could double as and when confidence returns to the market and smaller companies in particular.

The message for investors in AIM stocks is clear – do not be panicked into selling shares at very low levels – be patient and your reward will come in time!

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