Small companies are under-valued following correction

The UK stock market is still some way below the level reached before May's sharp correction, and nowhere is this more evident than among smaller companies. Although the FTSE 100, FTSE mid 250 and FTSE 350 indices have all gained roughly 5% since hitting lows at the end of May, the FTSE Small Cap (ex IC) index's recovery has been less vigorous, as it has rallied by a mere 2% since then. Meanwhile, the FTSE Aim market remains mired in gloom and has still yet to move onto positive ground. Since the May low it has lost a further 5%. But Aim's ongoing descent can be rationalised by two fact...