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Market Commentary - October 2019

Posted by Paul Jourdan on 15/Nov/2019

October saw market participants expending a good deal of Brexit angst, with the ”do or die” departure date of 31st October looming. In the event a new deal was struck in time and found increased support in the Commons, but having lost its majority the Government worried that it was vulnerable to amendments it didn’t want, and so the Withdrawal Bill was pulled and a General Election has been called with a view to breaking the deadlock in Parliament with which we are all now so familiar.

The UK economy has begun to show some strains from the prolonged uncertainties and dual risks of either a Brexit shock or the possible advent of a hard-left, broadly anti-private sector Labour government, with a number of companies commenting on investment decisions being put on hold, although it is difficult to quantify the impact of this. Whilst the risk of the deadlock dragging on is significant, there is a recognition amongst investors that pent up demand may produce a strong uptick in the economy if there is a favourable resolution to the Brexit impasse.

Through what was a political roller-coaster month, the stock market remained comparatively sanguine and calm.

TB Amati UK Smaller Companies Fund

The fund gained 2.6% in the month, well ahead of the benchmark, which rose by 0.7%. Appetite for growth stocks on AIM was strong but was focused on some less well-known names. Top contributors in the fund to performance were: GlobalData, an international data analytics business: Alpha FX, a foreign exchange and payments specialist working for corporates; and GB Group, a global identity data intelligence specialist. The latter two produced strong trading updates during the month.

The biggest negative contributor was Manolete, which gave back some of the gains from September, and Forterra and Clinigen also gave back recent rises. A new position was bought in Liontrust, a UK based fund management business, and the holding in DotDigital, a cross-channel marketing automation platform, was sold.

Amati AIM VCT

The NAV Total Return was 1.8% in the month, which compares to a rise in the Numis Alternative Markets Index of 2.3%. The biggest positive contributors were Block Energy, the oil and gas exploration company operating in Georgia, which recovered some ground after recent falls, and Ixico, the data analytics business focused on neuroscience, which rose to new highs following a strong trading update and news of contract wins. Polarean, which sells next-generation equipment for lung imaging, rose sharply after a share overhang was cleared. GB Group, the global identity data specialist, also rose following a strong trading update.