Confounding the critics

AIM continues to be on the receiving end of criticism from across the pond
but, in light of the sensational growth of the market, denigratory comments
smack of sour grapes.

The rise of the AIM market has clearly been an impressive success story for
the City of London. Notably, it has been the rising economic stars that have
been drawn to the market.

The big story of the last year has been the emergence of China as a credible
challenger to the established financial strongholds of the US, Germany and

Chinese companies are increasingly choosing AIM as the market of choice to
further their aspirations. Indeed, we saw a jump from 11 companies listing in
2005 to 26 last year.

While initial listings saw companies from the extractive industries look to
AIM, 2006 saw real estate, telecom and technology businesses seek to reap the
liquidity rewards of listing on AIM. Our own pipeline of work suggests the trend
is set to continue throughout 2007.

Critics will not be pleased to hear that China is not the only rising star
with designs on AIM. While last year was somewhat lacklustre in terms of Russian
companies listing, we fully expect 2007 to bring a revival as companies rush on
to the London markets ahead of the 2008 elections.

The elections bring a degree of uncertainty to the market, which many
businesses will be keen to avoid.

Perhaps one challenge to AIM’s appeal might be the launch of the Russian
Trading System’s new alternative market RTS Start. No doubt we will find out in
the coming year whether the CIS companies will be drawn away from AIM by the new

India’s rise in the economic power stakes has, of course, also attracted much
interest on the international stage. Eleven Indian companies chose AIM last year
and we are expecting more to do so this year.

With continued interest rate hikes and the threat of a downturn in the US
economy, there are question marks over the continued strength of the UK economy.

The emerging economies’ invasion should provide the extra firepower that AIM
needs if it is to maintain its world-leading position and establish itself as a
truly global exchange, but to do so it will need to look increasingly to
international investors.

James Ferguson is AIM partner at Deloitte

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