Declining Small-Cap Stocks on AIM Market: Doubts Surround Three Decade-Old Platform
Ready to dive into this week's financial news? On June 19, the London Stock Exchange's Alternative Investment Market (AIM) celebrates its 30th anniversary. But, let's take a closer look at the current status of AIM – it's facing a decline like never before.
While the 679 constituents listed today might seem impressive, it's a far cry from the 1,700 listed stocks back in 2001. Even during the Covid-fueled small-cap boom of 2021, there were 821 constituents. What gives?
High fix costs, often reaching £500,000 to £1 million per year, and dwindling trading liquidity have made AIM an increasingly burdensome and bureaucratic regime. This bureaucracy and lack of agility have made it difficult for fast-paced businesses to thrive. As a result, an increasing number of companies are leaving AIM – 89 in the past year alone, a trend that shows no signs of slowing.
The rise of alternative platforms like JP Jenkins and AssetMatch might be a factor driving these businesses away. On these platforms, companies can enjoy a more streamlined, less costly experience – an appealing option for many.
Turning to this week's standout performers, Karelian Diamonds saw a whopping 144% increase in shares following the official registration of their mining rights for the Lahtojoki deposit. This site is estimated to contain over 2 million carats, with a notional value of $211 million.
Haydale Graphene Industries surged 127% after reporting strong commercial traction for their JustHeat range, a low-power, graphene-based heating system aimed at energy-efficient applications. Atlantic Lithium rose 55% on news of leadership changes and a cut to management costs. Phoenix Copper added 27% after signing a non-binding letter of intent with a US investor for a proposed $75 million secured bond.
The week wasn't all roses, though. Metals One confirmed its acquisition of the Swales gold property in Nevada, causing shares to halve from a recent peak of 48.5p to 12.7p. Still, those who bought in at the start of the year are sitting on a 196% gain. Premier African Minerals fell almost 40% after announcing a £1.6 million fundraising to support work at its Zulu Lithium and Tantalum Project in Zimbabwe.
Last week, we discussed the rise of Bitcoin treasury companies, including Vinanz. On Friday, Vinanz (soon to be renamed The London Bitcoin Company) launched a £1 million WRAP Retail share offer, open to private investors. WRAP, a relatively new fundraising platform run by Winterflood Securities, aims to democratize equity raises by giving individual investors access to deals typically reserved for institutions.
That's all for this week's small-cap news. For more breaking news, visit www.proactiveinvestors.co.uk. And, if you're interested in expanding your investment portfolio, check out our list of top DIY investing platforms: AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212.
Remember, investing always carries risk, so do your own research before making any decisions. Stay informed and stay invested!
- The decline in the London Stock Exchange's Alternative Investment Market (AIM) is evident as it currently has 679 constituents, a significant drop from the 1,700 listed stocks in 2001.
- Businesses are increasingly leaving AIM due to high fix costs, bureaucracy, and lack of agility, and platforms like JP Jenkins and AssetMatch, which offer a more streamlined, cost-effective experience, are potential factors driving these departures.
- In the world of finance and investing, companies like Karelian Diamonds, Haydale Graphene Industries, Atlantic Lithium, Phoenix Copper, and Vinanz (soon to be The London Bitcoin Company) are currently making waves in the stock-market, with significant increases in shares and positive business developments.
