Small tech stocks beat junior miners

Fewer than one in three mid-cap stocks listed on the Australian Securities Exchange generated a positive return for investors last year, illustrating the malaise that has swept through the mining sector and wiped billions from the value of smaller listed companies.

But the junior technology sector is well poised to capitalise this year on the mining malaise after mobile technology and health companies dominated the list of the best performing small cap stocks in 2013.

_WestBusiness _ analysis of data drawn from IRESS shows nine of the 10 best-performing small companies were technology stocks.

The list includes only com- panies on the market for the full calendar year and excludes any floated during the period.

The top 10 stocks, drawn from a list of companies with a market capitalisation of less than $600 million, includes electronic health software companies Global Health and Azure Healthcare, and mobile technology developers Mint Wireless, Mobile Embrace and Moko Social Media.

Two companies with WA roots also feature among the top performers - Andrew Forrest-backed biotech Admedus and Panorama Synergy, a high-tech sensor company commercialising technology developed at the University of Western Australia.

Although thinly traded, micro-cap e-health provider Global Health was easily the stand-out performer for the year, starting 2013 worth about 0.3¢ a share and closing December at 37¢ - a total return for shareholders of about 12,233 per cent, according to IRESS data.

Underlining a big shift in investor interest was the fact only one junior resource company - Canada-focused coal explorer Atrum Coal - made the list, closing the year at $1.39 and delivering a total return of 633 per cent.

WA diamond producer Kimberley Diamonds only narrowly missed out on a place, closing the year at 95¢ for a total return of 428 per cent.

Although the broader market performed well, delivering its best annual performance since 2009, that was not reflected in the performance of the 1760 or so companies with a market capitalisation of less than $600 million.

Just 31 per cent delivered any gains for shareholders, and strong performers were even harder to pick. Less than 250, or about 14 per cent, delivered gains of 50 per cent or more and less than 7 per cent handed investors a 100 per cent return or better.

For the vast majority of investors, however, taking a risk on exposure to small cap stocks did not pay off. More than 1000 - or just over 60 per cent - of the surveyed companies went backwards during 2013, with more than a third registering falls of 50 per cent or worse.

Although the worst performers of the year are mostly drawn from Australia's junior exploration companies, with the exception of one-time biodiesel hopeful Mission Newenergy, the list also includes former market darlings Mirabela Nickel and Discovery Metals.

Both were battered by the twin horror of carrying big debt burdens in a difficult commodity market, problems exacerbated by operation issues in Mirabela's case, and a series of on-again, off-again takeover bids for Discovery.

Sitting just outside the bottom 10 is Nucoal Resources, crunched by the corruption scandal surrounding the acquisition of its NSW coal tenements and facing their revocation by the State Government.

Almost all of the market's worst performers of the year were small resources companies, with the only other exception being struggling drug developer Pharmaxis, which came in at number 23. RISKY BUSINESS 6.6 The percentage of listed small cap companies that bettered a 100 per cent return in 2013