THE London Stock Exchange boasted yesterday that it has attracted a record 129 foreign companies from 29 countries to its markets this year, raising a bumper £5.9 billion from new international issues — the highest level since the 2000 boom.

The Alternative Investment Market (AIM), the junior market, drew 112 of the new international issues, with 17 listing on the main market.

The LSE said that new international entrants cited London’s liquid international trading market as their main reason for listing in Britain. UK standards of regulation and corporate governance, analyst coverage and access to emerging markets were the other main factors, it said.

About 38 per cent of the international companies surveyed said they had considered floating in the US. Of those, 90 per cent said the onerous demands of the new Sarbanes-Oxley corporate governance law had made a London listing more attractive.

AIM has enjoyed phenomenal success, with 2005 proving yet another record year as 494 new issues raised £5.97 billion — double the £2.77 billion raised on AIM last year and more than half the £9.78 billion raised on the main market this year.

However, City experts said that unless close watch was kept on the quality and record of companies joining AIM, it may implode.

Justin Urquhart Stewart, director of Seven Investment Management, said: “We need to make sure there is careful validation and there is a standard in terms of the quality of the business plan of companies floating on AIM. Otherwise I fear this juvenile is likely to start behaving badly.”

Mr Urquhart Stewart said that there was now a string of East European and Asian stocks floating on AIM that “we can neither pronounce or understand how they operate”.

Some companies were starting to abuse AIM’s lighter regulatory regime by floating speculative “shell” companies that did not yet own any assets, he said.

Hilary Cook, of Barclays Stockbrokers, said: “AIM has been a great success but it comes with a health warning.”

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