• Christopher Hall

Small-Cap companies move to first place in market recovery


Since the market lows in late March this year, the Small-Cap and Emerging Companies Indices have rallied the most on the ASX.

Over the last month, the Small Ordinaries index (XSO) is up +14.71% against the overall market (XJO) +6.87%. Emerging Companies (XEC) have rallied a little further still, at +18.65%.

Both the XSO and XEC did fall further into the low seen in March this year, however both smaller indices are still, albeit slightly, higher than the overall market for the rolling 12 months.

The Small Caps index has been buoyed by strong performances from:

· Car Industry exposure from Ecplix (ECX) + 69%, AP Eagers (APE) +55% and AMA Group (AMA) +45%

· Technology companies such as Zip Co (Z1P) +62%, Nearmap (NEA) +49% and EML Payments (EML) + 47%

· Retails and Travel companies Webjet (WEB) +50%, Myer (MYR) +40%, Nick Scali (NCK) + 41%, Super Retail (SUP) + 39% and Kogan (KGN) +34%.

The top performers in this group have recovered from low bases, although some have continued much higher than where they were before the pandemic of COVID-19 hit the markets. One such example is Kogan which was at its 52-week high of $8/share in January, now touching $10/share – equalling its all-time high in 2018.

While some companies are still worse off, such as the banking and travel industries, others will find a silver lining to the COVID-19 cloud and reward loyal investors with higher prices.

Arrow Securities Group
 
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