Paul Blythe - Head of Capital Markets, Crowe UK
25 February 2019
Since the last publication of these rankings, AIM has seen 12 new issues join the market, raising aggregate new funds of £96.6m. During the same period, the Main Market saw 16 new issues raising aggregate new funds of £1.2 billion. On the face of it, this is encouraging news. However, when you consider that there were no new issues at all in January 2019 on AIM and only 1 on the Main Market, 2019 has gotten off to a slow start indeed. Furthermore, the quarter saw 21 cancellations on AIM leading to a net 9 companies leaving that market. The Main Market, by contrast, was able to add 2 companies to its ranks during the period following 14 cancellations. These figures leave AIM with 919 issuers and the Main Market with 1,161.
The above market activity has occurred during a period of very stormy waters, in that the UK is fast approaching the Brexit deadline, the continuing trade war between China and the US sees no signs of abating and cannabis phenomenon continues to attract huge amounts of investment in local markets. For companies seeking new and further issues, such a perfect storm has led to investors being very risk averse and keen to sit tight and see how these global issues unfold. At the time of writing, there remains precious little visibility that they will resolve themselves quickly.
With the Brexit deadline a mere six weeks away, the Prime Minister continues to play a waiting game with regards to her Plan B, preferring to keep parliament in the dark as to whether she is willing to exit the EU on a “no-deal” basis. Whether Mrs May is using the “no deal” threat to force MPs to vote in favour of her Plan B, if indeed there is one, or whether the country will leave under such circumstances, only time will tell. The effect of this brinkmanship is that UK businesses are left with little confidence as to what the landscape will look like in three months’ time and, importantly, guidance on how to navigate through it. The knock-on effect of this is that Euroland is left similarly in the dark as to how they are going to be able to trade with the UK post 29 March. Of course, Euroland needs the UK as much as the UK needs Euroland and trade will continue irrespective of the method of our leaving. The big question is how long will the uncertainty last and when can we expect our elected leaders to help us out by providing a suitable framework within which we can conduct national and international business effectively.
As with every threat, opportunities arise. With China and the US at loggerheads with respect to import tariffs on each other’s goods, both superpowers are looking for friends and allies to support their trade and political agendas. Naturally, the UK may soon be in a position to open trade negotiations with both sides of this political chess board, but choosing one over the other may well amount to geopolitical suicide. If we are to be cut adrift of the EU on the 29 March, we will need all of the friends we can muster and it is likely that striking trade deals with both China and the US will be high on the agenda. Popular consensus is that global growth is more reliant on the cooling of the China-US trade war than it is on the outcome of Brexit. The problem arises in that Brexit will likely be “solved” in advance of the China-US trade war, meaning that global markets may well be in the doldrums for a good while yet.
Closer to home, UK capital markets are slowly waking up to the opportunities provided by medicinal cannabis. Having seen the boom in recent times in Vancouver with the flood of both medicinal and recreational growers and exporters coming to market, the LSE and NEX remain on a watching brief. There are a growing number of advisers looking to grasp the nettle here in the UK and I would wager that by the time I write the next of these introductions, the London market may well be open for business. If so, this will be welcome news in such uncertain times.
Head of Capital Markets
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