Small capital companies are still relevant in the current Malaysian market condition, says Head of Research for
OSK Research, Chris Eng.

'Starting from January this year, except in March, the market condition has became more certain and currently is in the positive territory, where you find that the small capital companies have actually outperformed significantly against the general broader market.

'We expected the big capital companies to perform better at first, but the small capital companies have outperformed them for the first four months,' Eng told reporters during the launch of OSK's Top Malaysian Cap Book (50 Jewels) 2011 today.

Meanwhile, OSK Group's Regional Head of Research, Sam Chin, said small capital companies's shares tend to move more slowly in the market with liquidity flows coming in from abroad driven by foreign investors.

'Particularly in Malaysia, they will go for the large capital stocks first. But eventually, the large capital stocks get over-valued.

'The investors then will start to look at mid capital stocks, and then eventually the small capital stocks,' he said.

Chin also said the smaller stocks are also popular among retail investors as they have the so called 'higher beta' than the large capitals' stocks.

'Over a cycle, they tend to move up and down little more than the market movement. Retail investors have taken advantages of this,' he said, adding that they tend to make greater returns by timing their stock buying right.

'Institutional investors also participate in small capital stocks for a very specific reason, which is to out perform each other,' he added. - Bernama