Small and mid-cap stocks set to continue growth trend: MIDF Research

PETALING JAYA: MIDF Research said small- and mid-cap stocks are poised to continue their growth trajectory in the near future in line with more active retail participation.

Year to date, the FBM Small Cap Index has seen a gain of 17.1%, indicating a high potential for small-cap stocks to grow. This compares with only 8.2% gain recorded for the local market benchmark, the FBM KLCI.

The research house said, so far, retail participation on Bursa Malaysia in terms of foreign average daily trade on a weekly basis value remains moderate, above RM800 million, more than 33% higher that levels seen in 2016.

“In our recent visit note to Bursa Malaysia, the bourse noted that more younger investors aged 25 years and below are participating in the market, as evident by the 36% year-on-year jump of the number of Central Depository System account holders, to circa 30,000 in 2016.”

It said Bursa’s recently launched Mid and Small-cap Research Scheme (MidS) has the potential to attract retailer participants and in turn boost traction, both in terms of volume traded and value traded, for small- and mid-cap stocks.

MIDF Research said the cumulative foreign net inflow into Malaysia this year is about RM10 billion, offsetting 30% of the total net outflow in the last three years. So far, Malaysia has experienced foreign buying in 21 out of 24 weeks this year.

“There was two spikes on high value trading days, the first spike in mid-March was accompanied by an influx of foreign net inflow to Malaysia equities especially into blue chips, whereby the daily net inflow recorded was the highest so far in 2017, which amounted to RM816 million net.

“Meanwhile, the second spike which occurred at the end of May was partly attributable to the increase in trading activity following the rebalancing of the MSCI index,” it noted.