London's junior market for smallcaps, the Alternative Investment Market (AIM), has regained much of the ground it lost since the end of last year, and looks set to continue outperforming in the final quarter, with delistings slowing.
The market's strong gains over the first nine months of 2009 have been driven by commodity-based stocks, according to a note published on Monday by analyst Seymour Pierce. Mining and oil and gas stocks make up around 40 percent of the market capitalisation of the AIM 100.
We do not see this trend continuing into the fourth quarter of the year, but instead we expect more broadly-based outperformance across the sectors, the analysts said in a note issued on Monday.
The FTSE AIM 100 index .FTAIM1 has gained 60 percent so far this year, and is now at levels last seen at the end of September 2008. It has far outperformed the FTSE all-share index .FTAS, which has risen 20 percent in 2009.
There are still 261 fewer companies listed on AIM than at this time last year. In September there were just two new flotations -- wind farm developer Indian Energy and property investment firm NewRiver Retail. However, the rate of delistings appears to have eased, with September's tally of 15 the lowest in any month so far this year, significantly less than the peak of 37 in March.
At the same time, listing activity seems to be picking up, with two companies announcing AIM IPO plans on Monday alone.
Property company Winkworth said it was planning to raise almost 1 million pounds ($1.6 million) through a flotation, while investment company China Private Equity is trying its hand again after a previous planned listing fell through this time last year.
The decline does appear to have stabilised in recent months although, until investors recover their appetite for primary funding through AIM, the overall number of companies listed is likely to continue to fall, the Seymour Pierce analysts said.