Companies listed on the Alternative Investment Market (AIM) saw the average value of daily trading of shares fall 15% in the 12 months to the end of February this year, according to data from UHY Hacker Young. The roots of this slide in liquidity have been much discussed, but can be put down to UK investors increasingly trading in overseas companies, the broader drop in liquidity that followed the pandemic period peak in stock market trading, and a sharp drop in the share price of flagship companies such as Boohoo and Fever Tree.
Colin Wright, UHY UK group chairman and partner, unsurprisingly suggests that the UK government – which could change today – should be looking at initiatives to encourage investment in AIM companies.
The current lack of appetite for UK equities and small-caps in particular represents an obvious challenge for young firms wishing to access equity capital.
“These firms have other options – debt, private equity, venture capital, angels – but debt can be a killer for small-caps, and in the other instances investors are likely to want an exit at some stage, and the public markets are a traditional avenue,” says Russ Mould, investment director at AJ Bell.
