Dim Sum Express

Investment Strategy: Small caps yet to post share price strength amid lack of LT storiesBased on historical patterns, a shift in the MLT market focus towards small-cap stocks is notdependent upon a bottoming out in their relative valuations. Instead, we believe that consistentstrength in small caps typically needs to be supported by convincing long-term stories. Observablemarket preference towards small caps seen during 2H09-2010 and 2013-1H15 serves as goodexamples. With the absence of any such story and the fading influence of the small-cap M&A themeat present, we do not expect a share price rally in small-cap stocks to be seen any time soon.