AIM Report 2019

72 73 CONCLUSIONS REPORT CONCLUSIONS SUMMARY OF OUR FINDINGS 1. VOLATILITY SHOULD NOT BE A DETERRENT As you will have noticed, ‘volatility’ has become something of a watchword throughout this report and the reverberations of the final quarter of 2018 continue to be felt. In our last report on the AIM market, the relative lack of volatility seen during and following the Brexit referendum was highlighted, but like any market, AIM is susceptible to geopolitical and economic forces and so it proved in 2018. However, its strong and steady recovery in the first half of 2019 has demonstrated the market’s underlying resilience, as well as the confidence of investors that AIM remains a good place to put their cash. Indeed, the index has confirmed its moniker as “the world’s leading growth market” and demonstrated its growing maturity in recent years as a number of large companies have chosen to remain on AIM - or even jump from the main FTSE index to take advantage of the junior market’s growth potential. 2. RULE CHANGES APLENTY New corporate governance requirements are designed to give further comfort to investors and have served to underline AIM’s growing maturity. The collapse of some major AIM companies - albeit for differing reasons - has led to calls for tighter rules across the investment market. However, Marcus Stuttard, Head of UK Primary Markets & AIM at London Stock Exchange, told us in July 2019 there are no further rule changes planned and in general the market seems comfortable with this. The increased emphasis on the risk to capital of investments through VCTs and EIS has had a limited impact, although this may have contributed to a slowdown in the number of these products coming to market since the start of 2018. However, concerns over potential changes remain. The OTS inheritance tax review’s second report suggested the government should consider the relationship between BR and AIM. While it recognised the government is strongly supportive of BR’s important growth investment role in AIM, it remains to be seen what approach Boris Johnson’s administration might take. 3. BREXIT IS A DRAG, BUT IT WON’T LAST We hope that in future editions, we will not have to use the ‘B-word’, at least not in the context of a pervasive undercurrent of uncertainty. However, for advisers, investors, managers and investee companies alike, the lack of clarity on what Brexit will eventually look like remains a constant source of concern, even if in most cases it is background noise. Its impact on market sentiment, both among investors and small business confidence, and the continued craving for long-term clarity has been apparent throughout this report. The good news is that there is a general consensus that once a final Brexit position is agreed, the investment climate will improve.