The Effect of Different Corporate Market Capitalizations in International Portfolio Strategy in Eleven Asian Countries

Abstract

The study proved that the manners of returns generated from Large-, Mid- and Small- Cap stocks in 11 Asia countries are different and should not be ignored by international portfolio investors. We found that Asian Mid-Cap and Small-Cap markets indices have low correlations with both World market indices and among Cap market indices themselves; while Large-Cap funds have high correlations including amongst each other. Investors can obtain additional gains from international diversification if they consider including Mid- and Small-Cap stocks in their portfolio in Asian countries.