The Aim indices continue to outperform large and mid-caps this year. The party is far from over.
For starters, I feel that sterling is on the verge of a major upward move against both the Euro and US dollar. The Eurozone is lagging badly behind the UK in the vaccine rollout programmes, so much so that the pace of the UK economic recovery could be surging ahead of our European cousins by the summer when we are finally released from our lockdown shackles. The Bank of England’s wise men expect a mini-consumer boom to result as pent up consumer spending is unleashed. I agree and feel that corporates will also press the button on their Covid-19 delayed investment plans. Expect some eye-catching headline GDP figures to pull in increasing international capital flows as investors look to park their money in assets in an appreciating currency. This should be good news for equity markets, and small-caps in particular.
I also feel that the oil price recovery has legs, hence why I made a call on black gold late last year (‘Reasons to be bullish’, 18 December 2020). The energy sector is a fertile hunting ground for Aim investors. You can play these themes through the Aim-traded companies I feature this week.