Value of daily shares trading in AIM listed companies rises by 9% over the last year despite Brexit shock

Publications that covered this story include City AM on 12 December 2016.
  • Average daily value of shares boosted post Brexit
  • AIM avoids ‘flight to quality’ damage

Companies listed on the UK’s junior market have seen the liquidity of their shares rise by 9% over the last twelve months*, despite uncertainty surrounding Brexit, according to our research.

The average daily value of shares traded per company listed on the Alternative Investment Market (AIM) has surged over the last year, rising to £125,416 from £114,439 (see full data below).

We explain that the rise in the value of shares traded is a sign that the market has weathered the political and economic upheaval generated by the UK’s decision to leave the EU, despite many anticipating an adverse effect on performance. The AIM market typically suffers from a ‘flight to quality’ approach from investors during periods of extreme uncertainty.

However, the liquidity of AIM listed companies’ shares actually jumped by 45% from August to September, and a further 32% from £151,937 in September to £200,603 in October.

Laurence Sacker, managing partner of our London and Nottingham office, comments: “AIM normally suffers from political and economic uncertainty as investors rein in their risk appetite and sell off smaller companies. Once that sell off happens liquidity dries up.”

“This hasn’t happened this time around and we think that is a reflection of AIM’s increasing resilience supported by the maturity of many of the companies on AIM. A lot of the weakest AIM companies have been purged over the last five years and we now have an increasingly solid and high quality base of companies on AIM.”

The average value of shares traded per company on AIM dipped slightly in November as uncertainty over the US election hit the markets. However, the daily value of shares traded still remained high overall compared to earlier in the year.

We add that earlier in the year trading on the AIM market was also hit by a fall in commodity prices as well as growing economic pressure in China, which particularly weakened investor appetite.

Laurence continues: “From the slowdown in China, the fall in share prices for oil & gas and mining companies, the recent Brexit vote and the outcome of the US election, AIM’s performance has held up remarkably well.”

Liquidity of AIM listed companies rises by 9%

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Liquidity of AIM listed companies rises in last few months

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*Year end 30 November 2016