Paul Blythe - Head of Capital Markets, Crowe UK
02 September 2019
Since the last publication of these rankings, AIM has seen 10 new issues join the market, raising aggregate new funds of £177.9 million. When compared to the previous quarter’s activity which saw six new entrants raising £79.6 million, the quarter’s results point to a marginal opening of the market. During the same period, the Main Market saw 18 new issues raising aggregate new funds of £2,581 million. As with AIM, the quarter’s activity points to green shoots on the Main Market. From the perspective of the number of issuers, the quarter saw 18 cancellations on AIM leading to a net eight companies leaving that market. The Main Market, by contrast, was able to add five companies to its ranks during the period following 13 cancellations. These figures leave AIM with 895 issuers with an aggregate market capitalisation of £101.4 billion and the Main Market with 1,161 issuers and an aggregate market capitalisation of £3.96 trillion. Despite AIM losing a net eight companies during the period, it should be noted that the aggregate market capitalisation of its issuers was at its second highest value since 2017 and that it had 18 companies with a market capitalisation of over £1 billion. Top of the tree was Burford Capital at £3.29 billion.
Back in May 2019, I wrote to you about Brexit, the US-China trade war and the staging of European Cannabis Week in London. Since then, we have a new Prime Minister and the Washington-Beijing trade war has escalated to now include currency. Despite the improved market statistics set out above, both AIM and the Main Market are far from being ‘open as usual’.
Since my last foreword, the new Prime Minister Boris Johnson has committed to taking the UK out of Europe on or before 31 October, deal or no deal. His new Cabinet is a Brexiteer majority which will support this stated aim, but also with one eye on the possible general election. Despite these measures, the Brexit question stays on the table as Brussels remains steadfast in its refusal to reopen the Withdrawal Treaty and support at home for the remain camp gathers pace. All of this means that we remain in a period of uncertainty, which will keep a tight lid on London’s capital markets. Not surprisingly, institutional investors remain on a watching brief, pending resolution to the political landscape.
With regards to the continuing US-China stand-off on trade tariff s, a worrying turn of events has seen the US label China as a currency manipulator. On week commencing 5 August, Beijing allowed the renminbi to fall below its longstanding ‘hard deck’ of Rmb7 to the US dollar. By allowing the renminbi to depreciate, Beijing is looking to cushion the effects of the punitive tariff s imposed by Washington during what is now likely to be a broad and protracted trade war. The renminbi’s move through seven is therefore a sign that Beijing now sees little hope of reaching a near-term trade settlement with the US.
On a more positive note, the general appetite in London for medicinal cannabis related businesses remains on the upward curve. London staged its first European Cannabis Week between 23 and 29 June 2019, where anyone active in the sector, or looking to engage with it, came together to forge working and investor relationships for the year ahead. Naturally, there remains a significant brake on the sector as the UK legal landscape is significantly more restrictive than certain countries in Europe, states in the US and, in particular, Canada. However, a recent UK delegation to Toronto, comprising MPs from each of Labour, the Liberal Democrats and the Conservatives at least points to the opening up of the legalisation debate in the UK. This will naturally be a lengthy process but one that is surely inevitable.
By the time I write my next column in November, we may well be cast adrift of Europe and in the midst of finding our way in a ‘new world’. Even under these uncertain circumstances, our capital markets will be able to take comfort from the fact that a road has been chosen and that hopefully a clearer journey has, at last, begun.
Head of Capital Markets
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