Since the beginning of the year the market has continued to lack momentum and concerns over issues ranging from continuing banking and sovereign debt problems in Europe to upheavals in the Middle East have beleaguered the market.

Highs and lows on AIM

The number of AIM admissions in the first quarter of 2011 was 15, which is roughly the same as the figure for the first quarter of 2010 and much lower than the 35 admissions in the last quarter of 2010. The total number of companies on AIM has continued to decline with the figure standing at 1,174 at the end of March 2011. The level of primary fundraising in the first quarter was subdued with only £77m being raised, compared to the £242m raised in the first quarter of 2010 and £542m raised in the last quarter of 2010.

By contrast, the level of secondary fundraisings remained strong with some £1.6bn raised in the first quarter of 2011, compared to the £694m raised in the first quarter of 2010, but lower than the £2.56bn raised in the last quarter of 2010. There were 25 delistings in the first quarter, a figure lower than comparable figures for both the first and the last quarters of 2010, which were 51 and 40 respectively. The reduction has been concentrated, mainly, at the smaller end of the market capitalisation range. This continuing reduction in the number of companies coupled with the dearth of new issues continues to impact the activity level of the advisers servicing AIM.

Anecdotal evidence from AIM advisers suggests that whilst most advisers have a pipeline of new IPOs under development, not many of them expect the IPO activity to pick up until later in the current year. The dominant feature of the new issues on AIM has been the resource and commodity-related sectors that continue to attract the attention of the majority of investors.

The main market

The number of new admissions in the first quarter was 13, a figure similar to that in the first quarter of 2010 and lower than the 24 achieved in the last quarter of 2010. The level of funds raised for primary issues was £1.23bn in the quarter, also lower than comparable figures for both the first and the last quarters of 2010, which were £1.62bn and £2.67bn respectively. At the time of writing, Glencore had successfully completed its $60bn IPO on the London market, one of the largest IPOs in recent times on the London market. The main market seems to be attracting larger companies from a number of overseas locations, particularly those from the resource and commodity-related sections, as evidenced by the recent press comments on OGX, a Brazilian oil and gas company, and its key shareholder Mr Batista, to duallist the company on the London market.

What's in store later this year?

The ongoing reshaping of the banking sector, concerns over European national governments' budget deficits, inflation, anticipated interest rate rises later in the year and instability in the Middle Eastern countries affecting energy prices will be the key factors influencing analysts' views and the future direction of the markets. The level of optimism that was evident in the latter part of last year seems to have levelled off for the time being. For now, the direction of the market remains uncertain until some of the key challenges are addressed and investor confidence in backing new propositions returns.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.