IA UK Smaller Companies
Performance of sectors in 2022
IA UK All Companies ( -12.8 %) IA UK Smaller Companies ( -24.1 %)
5 %
0 %
-5 %
-10 %
-15 %
-20 %
-25 % |
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Jan22 |
Feb |
Mar |
Apr |
May |
Jun |
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Source : FE Analytics |
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Exaggerated and irrational For James Sullivan , head of partnerships at Tyndall , the fact that the smaller end of the market tends to display greater volatility during periods of stress can be a symptom of market liquidity , rather than underlying earnings or company dynamics . “ Sentiment can easily overwhelm the depth of the market , thus leading to exaggerated price movements ,” he says . “ Prices become irrational and detached from fundamentals . This creates great frustration but equally , for those with the patience of a saint , great opportunity .” In terms of whether the market has hit its lowest point , Sullivan says the jury remains out . “ The UK consumer is under severe pressure , which shows no signs of abating in the short term , and the market remains sceptical about what this means for domestically focused stocks and indices ,” he says . “ It is hard to argue a coherent case for a near-term rebound in the small-cap
Issue 86 - July 2022 / 51 /