Zak Mir gave Spreadbet Magazine readers some interesting insights
into a few AIM stocks this week, in particular Gulf Keystone Petroluem
which looks to me as if it might well drop below the key 172p support
level rather than start a new breakout - with a court case over the
ownership rights to the fields hanging over it then it is not surprising
there is nervousness around the stock.
But what of the AIM market as a whole with Chancellor announcing the
abolition of stamp duty on trading in AIM shares and so making them even
more attractive to retail investors? We would have expected this to
give a big boost to the market yet instead we lie the index largely
flatlined throughout the week and ended with a dip below the 750 level
that it nosed through to the upside during February and March. Indeed,
it is heading towards a critical point in the next week - just a couple
more percent to the downside and it will have given up the gains for
this year in contrast to the FTSE 100 and FTSE 250 which are still ahead
materially as shown in the chart below.
The AIM index is of course heavily weighted to the likes of GKP and
other oiliess, and this sector has continued to underperform for the
second year in a row with continued disastrous drill results by many
stocks such as Chariot Oil. Even the likes of Rockhopper with proven
reserves and a path to market have struggled to show positive returns.
AIM looks very likely to be in for yet another rocky ride this year…
Cityunslicker’s own favourite EMED Mining has suffered another delay
too in its quest for permitting of the comapny’s copper mine in Spain
and has dropped nearly 10% in a week.
So, overall, we are left with another “interesting” week ahead with
the desperate situation in Cyprus likely to affect near term
directionality.
A fudge and stability looks to be the most likely
outcome and if you look back at the history of the Eurozone from 2009 to
now, fudge after fudge seems to be the common theme. Mhy guess is that a
deal will be done over the weekend to try and calm the markets for a
Monday. If Cyprus gets even more messy then we can expect a sharp drop
in the index – yet another downhill rollercoaster as happened during the
last 2 summers… A most unwelcome environment for AIM investors given
their incremental volatility. Volatility that for a number of years now,
investors have not been compensated for relative to their larger cap
brethren.
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5 comments:
CU, I am still up on GKP and XEL, but down on everything else including Range and Heritage (also with a court case). I notice that GKP announced a new discovery - and the sp went down.
I don't know about delays, but EMED still need environmental approval before final approval. There are objectors still, but many of the milestones have been, or are nearly, met.
I think EMED is more affected by the crisis in Cyprus and its impact on the PIIGS, especially Spain - increased risk of confiscation by the government, especially with the regional/central infighting?
However, as previously stated, I think Cyprus will stay in the euro (with lashings of hot, last minute fudge), so we may see a modest EMED comeback. I tend to agree that AIM is sickly though - no dividends and high risk in a frightened world.
I have hardly changed my portfolio in 2 years!
Sticking with what I thin kare good bets is proving very tiresome though...
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"" The AIM index is of course heavily weighted to the likes of GKP and other oiliess, and this sector has continued to underperform for the second year in a row with continued disastrous drill results by many stocks such as Chariot Oil. Even the likes of Rockhopper with proven reserves and a path to market have struggled to show positive returns. AIM looks very likely to be in for yet another rocky ride this year…""
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