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ASOS, Quindell sell-offs weigh on AIM market

Last updated: 10:41 25 Nov 2014 EST, First published: 11:41 25 Nov 2014 EST

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Swift and severe sell-offs in some of AIM’s largest stocks has taken its toll on the UK’s junior market in recent months.

High profile small-cap constituents ASOS (LON:ASC), Quindell (LON:QPP) and Blinx (LON:BLNX) have been all ditched by investors after hitting trouble.

The selling has contributed to a 55 point drop on the FTSE AIM All-Share Index over the past three months, which now stands at 727 points, down 12% year-to-date.

Shares in online fashion retailer ASOS, often the most traded stock of the month, hit their lowest level in two years in October at 1,785p following an earlier profit warning.

At that price the clothing supplier is worth less than £2bn, though at its peak it was valued at as much as £6bn.

Meanwhile, troubled insurance claims outsourcer Quindell’s share price collapsed further this month after both its chairman and broker resigned over controversial share dealings.

Shares were trading 71p today, down from 177p at the end of August. They were worth over 600p in April, before a short-selling attack by hedge-fund backed Gotham City slammed its share price.

Video and advertising platform Blinx has also taken a hammering on trading concerns and, after peaking in January at 218p, the shares can now be picked up for 20p.

Underlying that, however, AIM has been doing a good job of raising money for small companies.

Secondary market raisings were dominated by mining and oil firms in October, a trend that has persisted thoughout the year according to a research note by Allenby Capital.

The broker says oil and mining companies have raised 32% of the total money raised on the secondary market this year.

More broadly, Allenby says AIM-listed firms as a whole raised a total of £326mln in October, up 75% on the previous month and the highest monthly amount since July.

It said the uptick was down to the end of the summer holiday lull and the removal of economic uncertainty, notably the Scottish Referendum.

The money raised was split evenly between IPOs and existing companies raising new funds issues.

A total of £4,951mln has now been raised on the market so far this year, 87% higher than this time last year.

Seven new companies made their AIM debuts during the month, including mobile and data services provider Gamma Communications (LON:GAMA), which raised £82mln - the largest amount among the newcomers.

Ten firms left the market, with two of them being acquired and three subject to reverse takeovers.

Average daily volume in October ticked up as investors traded total of £3.17bn during the month with a trade value of £5,124.

Allenby says the qualification of AIM stocks for inclusion in tax free ISA wrappers, implanted last year, has spurred interest in the junior equity market from retail investors.

Meanwhile the broker says that the market has slowly transformed into more of a platform for UK- based companies.

Investors have shied away from natural resource stocks, which are typically located outside of the UK, due to falling oil and iron ore prices.

Six of the new AIM-listed firms have their central operations based in the UK, while 62 of the 95 admissions to the market have been UK-based.

The broker added that the market is going through a ‘cleansing process’ where small companies are being replaced by larger firms of higher quality.

The average market capitalisation of an AIM firm stood in £65.3mln at the end of October, while 185 members topped the £100mln mark while three were valued at greater than £1bn.

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