The Dark Horses of the Stock Market: Smaller Equity Markets are Suddenly Making Waves and Bringing Home the Big Profits

A man walks past screens showing stock information at a brokerage house in Jiujiang, Jiangxi province, China October 8, 2018. After being sidelined by investors for much of this year, some smaller equity markets are suddenly winning favour, according to Bloomberg. The trend is a surprising turn of events, given the dominance of major markets such as the US and China in recent years.

But what is driving this shift in investor sentiment? And which smaller markets are leading the charge? To answer these questions, we need to look at the underlying factors that are making these markets so attractive to investors.

One key factor is the search for yield. With interest rates at historically low levels in many developed markets, investors are looking for alternative sources of return. This has led to a surge in demand for stocks in smaller markets, where valuations are often lower and dividend yields are higher.

Another factor is the growing importance of emerging markets. As the global economy becomes increasingly interconnected, smaller markets are becoming more integrated into the global financial system. This has led to an increase in trade and investment flows between these markets and the rest of the world, creating new opportunities for investors.

So which smaller markets are leading the charge? One of the most notable is Vietnam. The Vietnamese stock market has been on a tear in recent months, with the VN Index rising by over 20% so far this year. This is driven by the country's rapid economic growth, which is being fueled by a young and dynamic population, as well as a highly competitive business environment.

Another market that is gaining traction is Poland. The Polish stock market has been boosted by the country's accession to the European Union, which has led to an increase in foreign investment flows. The market is also benefiting from the country's highly skilled workforce and competitive business environment.

Other smaller markets that are worth watching include Malaysia, which is benefiting from a rebound in commodity prices, and Thailand, which is seeing a surge in tourism and exports. These markets may not be as well-known as some of the larger markets, but they offer investors a unique combination of growth potential and value.

Of course, investing in smaller markets is not without its risks. These markets can be highly volatile, and investors need to be aware of the potential pitfalls. However, for investors who are looking for a way to diversify their portfolios and tap into the growth potential of emerging markets, these smaller markets are definitely worth considering.

In conclusion, the recent rally in smaller equity markets is a trend that is worth watching. With their lower valuations, higher dividend yields, and growth potential, these markets offer investors a unique combination of value and potential for returns. As the global economy continues to evolve, it will be interesting to see which smaller markets emerge as the next big thing.