Rakuten Trade advises focus on small, mid cap stocks

File pic of Bursa Malaysia screens. CIMB lowered its end-2015 target for the KLCI to 1,700 from 1,800.

KUALA LUMPUR: Rakuten Trade continues to be optimistic on the FBM KLCI in the near term and advises investors to  focus on the small and middle capitalised stocks.

Its head of research Kenny Yee said on Monday  the house's target for the KLCI market is at 1,850 which is pegged at a 16.5 times historical market earnings.

"If what we expect comes true whereby the influx of foreign funds come through we will see a very positive (impact on) the KLCI," he said.

Yee said that small and mid cap stocks could see an even steeper climb from the spillover effect of the larger caps.

"These stocks usually have a higher beta. But it is getting tougher to unearth all the good small companies," he said.