AIM market off to a flyer since ISA rule changes on 5th August; could we be on the cusp of an AIM boom?
Small cap researcher Investors Champion which actively covers stocks on London’s junior market through its AimZine and AIM for IHT sections has drawn attention to the significant outperformance of AIM since AIM shares were accepted into ISAs on 5th August.
Michael Crocket editor of the AimZine section writes:
“There was a significant impact on the AIM market immediately the new rules came into force with 13 AIM companies having seen their share prices more than double and as many as 56 companies seeing increases of 50% or more. No fewer than 28 of the 56 strong gainers referred to above were from the Mining sector although only 2 companies came from the Oil & Gas sector.”
“All of the 56 companies are sub £100 million market cap companies (even after the rise) and 60% of them are valued at less than £10 million suggesting that the smaller end of AIM is enjoying a strong boost from the increased liquidity.”
AIM out performs FTSE
The small cap outperformance is further evidenced by the fact that the AIM All Share Index was up 4.7% in the month from 5th August, with the AIM 100 index of the largest AIM Companies adding only 3.1% in the same period. Even AIM’s giants significantly outperformed the FTSE100 index which actually lost 2.1% over the same time.
Beware ramping on the Bulletin Boards
However, it’s not all plain sailing. Investor’s Champion’s AimZine section predicted back in April 2013 that greater liquidity in microcap stocks would bring a field day for those ramping stocks on the bulletin boards.
Michael Crockett writes:
“Clearly some individuals are making substantial profits from pumping shares whilst some inexperienced or gullible individuals are left nursing substantial losses. The owners of the bulletin boards seem happy to turn a blind eye to this market abuse and the regulators are perhaps not yet aware that it is going on.”
Back in October 2010 AimZine interviewed an infamous bulletin board poster. The techniques used by this rogue then are still current practice – see the 2010 article here.
Positive effect towards end of tax year
Notwithstanding the risks, Investors Champion believes that AIM could continue to benefit from increased liquidity in the coming months with a particularly positive effect towards the end of the tax year when the last-minute ISA rush comes into play. Furthermore, from April next year there will be further encouragement to buy AIM shares with the abolition of stamp duty on AIM share purchases.
5th September 2013
For further information, please contact:¬
Investor’s Champion Ltd
Tel: 01923 713893
About Investor’s Champion Ltd
Investor's Champion supports companies and investors alike with objective, forthright commentaries on quoted companies.
Our service was established on two core beliefs: that small companies could benefit from better coverage - and that investors could benefit from more regular, objective commentaries upon those same companies.
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