Deep Dive: UK AIM left 'vulnerable' to rate hikes but discounts remain 'attractive'

‘More upbeat’ outlook

The economic backdrop of the last two years has left smaller companies bearing the brunt of redemptions as investors continued to shy away from UK equities, said Robert Alster, CIO at Close Brothers Asset Management.

The aftermath of Brexit, the Liz Truss government and Mini Budget, record-high inflation and rising interest rates left the UK Alternative Investment Market "particularly vulnerable to an increase in interest rates" due to its concentration of richly-valued growth stocks, he noted. Recent research by UHY Hacker Young mirrored Alster's analysis, which it found a record low in IPOs on the AIM, with just nine companies floating in the 12 months to March 2023 - an 88% drop from the 74 listings of the previous year. New listings on AIM reach record low in the last twelve months Alster s...