Focus on small cap stocks

In the midst of an expected three to four months of drawdown (decline from peak to trough) for small caps, there will likely be rallies in between but each rally will make lower highs and lower lows progressively, said Pong Teng Siew (pic right), head of research at Inter-Pacific Securities. Stocks with high growth potential are also worth watching such as information and communications technology firm Prestariang which has been chosen as the main implementer of the Sistem Kawalan Imigresen Nasional (SKIN) project, said Danny Wong(left pic), CEO, Areca Capital.

Due to improved sentiment on Bursa Malaysia on news of higher exports boosted by the weak ringgit, there may be a short mid-week rally in small caps.

These small caps had been holding fairly steady for a few days last week despite the drop in the main index, possibly in readiness for a push after sharp drops two weeks ago.