The same can’t be said for smaller niche players such as Empresaria, Harvey Nash, Hydrogen, Matchtech and Morson. Here, a well-worn path is being followed as, during periods of stock market recovery, the share price performance of small companies often lags larger peers by a considerable margin.

One explanation for this phenomenon is liquidity, which in essence is a measure of how easy it is to buy and sell shares in a company. As investors find it more difficult to trade in small companies (and therefore to sell if they have made a mistake and want to get out) they wait
until economic recovery is absolutely certain before buying.

As investors find it more difficult to trade in small companies (and therefore to sell if they have made a mistake and want to get out) they wait
until economic recovery is absolutely certain before buying.

Hays reported Q3 revenue trends modestly stronger for than anticipated buoyed by Asia Pacific comfortably exceeding expectations.

Constant currency net fee growth was -10% in Q3 2010 which is slightly ahead of our -12% forecast. At the divisional level, recent trends have been sustained with Asia Pacific comfortably exceeding expectations. In contrast the UK suffered from weak public sector demand.

Although revenue trends are modestly stronger than anticipated, headcount is also rising (particularly in the Asia Pacific region).

Consequently our forecast of £68.3m pre-tax profit for the whole year, and 3.1p earnings per share remains unchanged.

Q1 results at Robert Walters were much stronger than expected with group net fees +27% on a constant currency basis driven by a +52% figure in Asia Pacific. This is a dramatic swing from -5% in Q4 2009 and is comfortably ahead of our +4% H1 forecast.

However, the group flagged that additional headcount investment will hold back profit recovery and consequently consensus upgrades may be limited to 10-15%.