First Survey of 2013 Shows Increased Optimism Amongst Small and Mid-sized Stock Market Companies
The latest quarterly survey undertaken by the Quoted Company Alliance (QCA) identifies that confidence amongst small and mid-sized companies listed on the UK Stock Markets has improved, however there still remains some concerns about access to funding. The report also highlighted a lack of knowledge about alternative funding sources such as corporate bonds.
Companies’ optimism about their own prospects has increased substantially, in the last quarter. In addition, company’s confidence in the UK economy is at its highest level since the survey began 18 months ago.
72% of small and mid-cap quoted companies are optimistic about their own business prospects this is up from 63% in October 2012.
Over half of the companies surveyed expect the number of their full-time employees to increase over the next 12 months, the highest level seen on the index. Confidence about business growth expectations have also improved, with the mean expected turnover growth now at 11.2%, up from 7.9% in the last quarter.
However the survey uncovers a widespread lack of knowledge about corporate bonds as a potential alternative source of funding. More than one fifth (22%) of listed small and mid-sized businesses did not know what the main benefit of issuing corporate bonds was, and nearly two thirds (62%) either would not be interested or could not specify if they would be interested in issuing a corporate bond as an alternative source of finance.
Similarly, a quarter (23%) of advisors admit they do not know whether they would recommend issuing a corporate bond to clients as an alternative source of funding and only 16% of advisors believe that there is sufficient information available for companies to evaluate the market effectively for corporate bonds. Half of advisors (49%) were not aware of the London Stock Exchange’s electronic Order Book for retail bonds.
John Holland Senior Partner at Flotation experts Holland Bendelow says, ‘The increase in optimism in smaller quoted companies measured over the last quarter is encouraging, particularly as it is smaller and medium sized companies that have taken the full force of the double dip recession’. ‘Whist stock markets such as AIM have generally continued to enable companies to raise funding at a time when banks have not, clearly there is more that need to be done to ensure the smaller quoted companies are able to access the funding they need to grow and employ more people.’
John Holland was the former head of the UK regional operation at the London Stock Exchange, with responsibility for both AIM and The Main Market. He has been advising companies since 1995 about stock market flotation and is a regular author of company finance and stock market publications and articles in business and financial press as well as various institutions on the internet.
