Short Sellers’ Raid on Hong Kong Means Small Caps Go Cheap
- Valuation gap between small- and big-cap stocks has widened
- Small caps trading volume is near lowest in more than a decade
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Shares of small Hong Kong companies haven’t looked this cheap in the last 10 years, as woes including flash crashes, short-seller attacks and a liquidity drought send investors fleeing.
The MSCI Hong Kong Small-Cap Index is trading at 8.9 times estimated 2019 earnings, compared with 14.5 times for a corresponding large-cap gauge. The valuation gap between the two hit its widest level since August 2009 this month, according to data compiled by Bloomberg.