KUALA LUMPUR: Bursa Malaysia's FBM Small Cap Index hit a 10-year high of 19,475.08 points, on a return of foreign capital and a stable domestic politic scene.
It closed at 19.549.28 points at 5pm today.
The FBM Small Cap Index all-time historic high of 20,268.57 points recorded in March 1997.
The index has seen 17.8 per cent gain in market value to RM112.8 billion with the overall performance of Bursa Malaysia as one of its driving factors.
Year-to-date the index is up 19.5 per cent, while the benchmark FTSE Bursa Malaysia KLCI is up about 11.0 per cent.
"Currently the index stood at 19,475.08 points. In our view, stabilisation of the domestic political scene, as well as return of foreign capital was behind the upward trend in the index," Tradeview Capital fund manager Neoh Jia Man told Business Times when asked about the driving force behind its uptrend.
The FBM Small Cap Index refers to all the stocks within the top 98 per cent (market capitalisation) of Bursa Malaysia Main Market, but excluding the top 100 companies.
Neoh said investors typically refers to those counters with less than RM500 million market capilisation as small-caps.
FBM KLCI is used as the market benchmark as it consists of the top 30 companies by market capitalisation on Bursa Malaysia, and there is no overlap in terms of constituents between the two indices.
The performance of both indices, nonetheless, are highly correlated, with FBM Small Cap Index being much more volatile but with higher return over the long-run.
The FBM Small Cap Index outperformed the FBM KLCI, yet the FBM KLCI remains the market leader.
Despite no overlap in constituents—since the FBM KLCI comprises the top 30 companies by market capitalisation on Bursa Malaysia —the two indices are highly correlated.
"This correlation suggests that while the FBM Small Cap Index is more volatile, it tends to offer higher returns over the long term compared to the FBM KLCI. "Consequently, movements in the broader market, as reflected by the FBM KLCI, can influence the performance of the FBM Small Cap Index, even though their individual components differ," said Neoh.