AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights:
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The AIM market, managed by London Stock Exchange Group PLC continues to underperform in 2024, diverging from trends seen in major global indices.
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Factors contributing to AIM's weak performance include uncertainty regarding potential tax changes and easing listing requirements on the Official List, which could divert new listings away from AIM.
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The report underscores a broader trend of capital outflow from UK equities, exacerbating challenges for smaller companies and limiting their access to investment.
The AIM market, which serves as a platform for smaller UK companies under the management of London Stock Exchange Group PLC {LSE:LSEG}, has been underperforming in 2024. Unlike other major indices, AIM remains down for the year, reflecting ongoing challenges within the UK economy and persistent investor apprehension regarding potential changes in tax treatment for AIM shares.
Shore Capital's analysis identifies several factors contributing to AIM's lackluster performance. Among these is uncertainty surrounding the upcoming Budget, particularly concerns about possible changes to inheritance tax, which may weaken demand for AIM stocks and serve as a performance cap. This uncertainty has deterred investment in the junior market, leading to a challenging environment for growth.
Additionally, recent easing of listing requirements on the UK’s main stock market, the Official List, has raised concerns that new listings may increasingly gravitate toward this platform, further dampening AIM’s prospects. While global markets, such as the US S&P 500 and Germany's DAX, have achieved record highs in 2024, UK equities overall have struggled, with AIM being particularly hard hit.
The report also highlights that, despite many UK stocks being undervalued, the ongoing outflow of investor capital from the UK market has intensified AIM's underperformance. This trend has persisted for several years, as smaller UK companies grapple with difficulties in attracting investment. Fund managers have often been compelled to sell UK equities to address redemption demands from investors rather than reinvesting in the domestic market.
In summary, Shore Capital's findings underscore the significant headwinds facing the AIM market, revealing a complex interplay of economic, regulatory, and market dynamics that have contributed to its ongoing struggles in 2024.
