16 Mar 2015

AIM market back on track

The AIM market has thrown off the constraints of the financial crisis and is back on track to reach trading levels not seen since 2007

According to research from UHY Hacker Young, the average daily amount traded per company soared by almost 50% over the past year.

In monetary terms, this is a daily amount of £156,000 per company throughout 2014, compared with £107,000 in 2013 and just £95,000 in 2009 at the height of the crisis.

However, the market still has some way to go to match 2007 levels which averaged per day per company at £179,000.

“Increased investor interest in AIM drove the surge in liquidity during 2014, despite a patchy performance in the valuation of companies across the market as a whole, with many of the larger companies hit by falling oil and commodities prices,” said UHY corporate finance partner Laurence Sacker.

He said investors were reluctant to invest in small cap companies post the financial crisis because of the increased risk. Now, however, their “appetite for Aim’s growing companies” seems to be sharpening.

“2014 also saw healthy levels of IPO activity,” he added. “Improved liquidity on the market can only boost those companies’ attractiveness.”

UHY points out that several changes to the tax rules on AIM transactions may have played their part in making the market more popular with investors.

Stamp duty was scrapped in April last year on trades in AIM shares. This move followed the government decision in August 2013 to allow investors to put AIM shares in their ISAs for the first time.

Also, if shares in qualifying AIM companies are held for two years, then under business property relief rules, they can be free of inheritance tax.

“Growing numbers of retail investors are now attracted to the market providing vital capital to small cap companies and enabling their future growth,” Sacker said.

Julia Irvine


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