Our roundtable of financial advisers discuss their hopes and concerns for the AIM market
Jon Marshfield, Chartered FInancial Management:Our big hope is for reduced volatility in the market. We would also like to see a narrowing of spreads: some are very wide, which can create expensive trading conditions. I would also hope that the share price discounts narrow compared to the value. On the flip side, our concerns will obviously be that there is greater volatility, and that liquidity might become an issue. Perhaps the biggest concern, though, would be if there are a couple of high profile failures, because of the impact that would have on the public perception of AIM. It’s not the smaller companies, because you expect a certain amount of failure among these, but if some of the bigger companies on AIM were to collapse, then the negative sentiment that would create would be bad for the market.
David Neale, Beckford James: I hope the market in general will demonstrate resilience against import/export type concerns and the Brexit backlash in the first instance, though we’ve seen how certain sectors have suffered. Aside from the general economic influences, an historical concern is seen in how readily an AIM company’s share price can be artificially hyped by noise around it, and how bulletin boards can drive a company’s AIM share price incredibly quickly both up and down. This doesn’t necessarily support investor confidence or help the underlying company. Obviously, this can happen on the main market but there is likely to be greater liquidity there than in company stocks at the very small end of the market as highlighted by the recent Woodford turmoil. Hopefully the corporate governance changes will increase confidence and reduce the risk of high-profile failures or scandals. Increased regulation will push up costs, which may lead to companies opting not to list and potentially removing good opportunities for investors as well as fund raising for companies.
Natasha Fathers, Hawsons Wealth Management: My concerns are around the uncertainty in the UK. As a result, investors may naturally migrate to what they perceive to be lower risk, safer investments, such as fixed interest, commodities and cash. Meaning the smaller companies are forgotten. Having said that, in my experience, AIM is now spoken about more widely than ever before. We have had clients successfully utilise Business Relief. It is useful to have real-life examples of its success when advising future clients. The change in focus from the fund managers to the smaller/middle sized companies is positive as these will benefit from new investment. We are now seeing new companies being picked and that is exciting. It is always nice when investors can say they directly participated in the success of a company.
These comments formed part of the adviser roundtable for the AIM Report 2019. To read the full roundtable, as well as the findings from the rest of the report, visit https://intelligent-partnership.com/reports/aim-industry-report-2019/