The smaller, the worse performance of late.

PaulRen's picture

The smaller the Thai stock the worse its relative performance of late.  But this will change and a catch up is soon likely.

Further to my just previous member article, see the below revealing graph, comparing the SET index to other lesser known SET indexes.
The SET50 is the biggest cap index and sSet is the smaller cap index (white line) and SET100 represents the top 100 Thai stocks.  Look at the immense divergence that nobody talks about here. SET50 represents the 50 biggest stocks on the Thai stock exchange. The most often quoted "SET index",  is a by market cap weighted index, hence also a bigger cap geared index. (i.e. the bigger the mkt. cap. the more its weighted in that index.)  The MAI index (another small cap index) is down -13.2% year-to-date vs. the SET index is up 1.5% year-to-date.  That is a more then a 10 to 1 difference!

BTW, you can see the stock which make up the sSET index at this link:

As you can see from all this, Thai smaller capitalized stocks have by a large margin way under-performed the major/broad benchmark this year, same as for most part last year. What is amazing is the degree of divergence!   For years it was irregularly so the opposite, but this was rarely so reported.  There are some key reasons for this presently... here I just want to show how/why our investor focus, got sidelined of late.  Its been reported lately how SET trading is no longer dominated by the local retail investors, which in the past made up well more then 50% of trading volume.  Currently its dropped to below 50%, to a record low.  Seems like individual investors are giving up?

We have seen this in the past, but never to such a degree, the exact reasons for this divergence is hard to pinpoint but I do have some understanding and it has to do with the broad inaptness of Thai brokers -and their marketing officers.  Yet, as is the case all around the world, smaller vs. big stocks relative performance varies over the years only to catch-up to the mean, in time.  I remain convinced this will happen here as well (as it always did in the past) once the Thai election takes place.  In the meantime smaller cap. geared investors are suffering, mostly for the reasons stated above..not due to poor stock selection.

Best Regards,

Paul A, Renaud.

The smaller the worse..