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These are lean times for the stock market, yet nowhere is the anorexic appetite of investors more evident than in the dry dock of the floats arena. According to recent statistics published by The Times, just nine companies managed to get a float away during the three months between the start of January and end of March, raising just £166 million between them. Mildly at odds with these stats, the London Stock Exchange’s own website lists ten companies to have joined the London market, with approximately £250 million raised. But even these slightly inflated figures are still dismal when held up against equivalent stats for the past two years. In the first quarter of last year close on £6 billion was raised by no fewer than 44 firms joining the UK stock market, while 71 companies tapped investors for over £4 billion between January and March of 2006.

Clearly we have entered into a bleak spell for the new issues market. Investors, both private and professional, are far happier playing a waiting game, which is hardly surprising given the machinations of the equities market in the face of recessionary pressures, a global credit squeeze and, more’s the pity, already burnt fingers. More to the point, why should investors go looking for new opportunities when so many tried and tested firms are trading at their lowest levels in years?

This in itself suggests a hairy time for London’s junior Aim market. Aim is a market that constantly needs refreshing, it needs a consistent supply of new blood to keep investors interested, and if this dries up, Aim is in danger of withering on the vine.

Aim’s past performance is already looking decidedly shaky. In the 13 years or so since it first popped out of the LSE’s ideas bin it has actually done diddly swat (see chart), opening at roughly 1,000, and today trading at virtually exactly the same level. I’d be a bit worried that Aim had achieved nothing in 13 years if I was thinking of floating my business.

The junior market is also facing other hurdles too. Companies are increasingly using Aim as merely a springboard to the full market. Of course, this was one of its supposed objectives in the first place, a low cost, light touch regulatory environment that allowed young and untested companies to get a foothold on the steep face of capital fund raising. The trouble is, an increasing number of firms are becoming big fish in a small pond, and the bigger, better, proven ones are deciding that now they’ve got a track record and an existing following in the City, it’s time to get a seat at the main market table where the scope for new investment is vastly greater. But if every time the cream rises to the top it gets scooped off, Aim will end up a pale pint of semi-skimmed instead of gold top.

Many small and mid-sized firms had put plans in place for flotations early this year in order that the owners could exit before changes to capital gains tax rules came into force. The theory was that after the ups and downs of the latter part of 2007, this year would see markets calm down and stabilise, but this clearly hasn’t happened. Worse still, given the shift away from small, high-risk stocks by investors, many IPO plans have been mothballed indefinitely.

Other changes are also afoot. The landscape for international capital markets is increasingly being shaped by growth in emerging markets such as Hong Kong, China and India, private equity strategies, and hedge funds, says research from global legal services organisation DLA Piper.

According to the research, Asia and other rapidly emerging markets are changing the capital markets landscape at a time when developed markets have been slowing due to the effects of the credit crunch. Companies from as far afield as Asia, Latin America, and several former Soviet states, have given the UK new issues market a vital prod when it has started to slow in the past, particularly Aim. But this is changing and Aim faces challenges from overseas to its image as the Sarbanes-Oxley-free haven that has driven a large chunk of its success to date. Small growth markets and segments are springing up all over Europe, and all want a piece of the low regulation pie that Aim has enjoyed largely to itself so far. For example, the Warsaw Stock Exchange launched an alternative trading platform called NewConnect last August with the intent on raising finance for young companies with high growth potential. It is outside the regulated market and offers fast and low-cost entry to the market via a public offering or private placement depending on the level of documentation.

Closer to home there’s PLUS Markets. Gaining recognised investment exchange status last year means it can offer full listings to companies, but while this would allow it to go head to head with the LSE, PLUS remains focused on small and medium-sized businesses largely from the UK. Whether it can ultimately mount a serious challenge to Aim remains to be see (much of its progress of late appears to have come from dual-listed companies rather than it being chosen in preference to Aim), but the growing number of rival small markets, coupled with a squeeze on new companies willing to brave the current market climate are worrying factors. It might be a bit early to start reaching for Wagner’s Death March, but Aim certainly faces a stiff test of its resolve over the coming months.