SEPTEMBER MARKET OVERVIEW

SEPTEMBER MARKET OVERVIEW

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

IN BRIEF
The fall in the AIM market in September hardly came as a shock considering the state of the rest of the UK stockmarket and the weakness seen in other markets around the world. The month saw the rescue of leading financial institutions such as the US insurance giant AIG, the US mortgage groups Fannie Mae and Freddie Mac and the collapse of US banks Washington Mutual and Lehman Brothers. Over here, Bradford & Bingley has been nationalised whilst HBOS is to be taken over by LLoydsTSB.

In these circumstances, and with uncertainty continuing to surround world markets, investors have been withdrawing funds from equities with smaller company stocks, such as those quoted on AIM being particularly badly affected. The result has been that during the course of September, the FTSE AIM All Share Index has dropped by 22.5% as it has fallen to a level of just 621.81. This Index stood at a level of 1026.3 at the end of May and so it has fallen by almost 40% in just four months! Over the same timescale the FTSE 100 Share Index has dropped by 19% and the FTSE All Share Index has fallen by just under 19%.

Although it is disappointing that the Index has fallen, investors should not become too disheartened. Trading volumes did pick up in September from the woeful level of August, although the value of shares traded (£4.2bn) remained below the level of July (£4.5bn), as did the number of bargains, 347,000 versus 416,000. Despite this increase in trading, it was not easy to deal in many shares during the month with marketmakers maintaining neutral trading positions. This meant that they were unwilling to expose themselves to risk by either selling stocks they didn’t own or buying stocks onto their book without someone to sell them to. Because of this difficulty in trading volumes were lower than might otherwise have been the case.

The number of companies whose shares are traded on AIM also fell in September to 1,608, compared with 1,625 at the end of August. Although there were a number of new issues joining the market, there were many more leavers as companies became insolvent, went private or were taken over. Given current market conditions, it seems unlikely that this trend will change over the rest of the year with the new issue market set to remain moribund until next year at least.

For investors, the message remains the same – there are some companies on AIM which have unjustifiably low share prices and these could perform extremely well as and when the market turns.

The full Market Overview for September, 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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