The Determinant Factors Of Equity Return

Beath, A., Frauscher, K., Jarvis, M., & Reis, J. G. (2008). The Investment Climate in Brazil, India, and South Africa: A Comparison of Approaches for Sustaining Economic Growth in Emerging Economies. Washington D.C., United States: World Bank Publications.

The relationship between inflation and unemployment is a topic, which has been debated by economists for decades. It is this debate that has made the opinions about it evolve. In this essay, the controversial topic will be discussed by viewing different economists’ opinions on that according to time sequencing.

Mayora and Delta Djakarta are both well-known companies of this sector. These companies are listed in the Indonesian Stock Exchange (IDX) with their respective codes (MYOR) and (DLTA) (C). As the both of them are rivals in the industry, myriad of detailed analysis to compare and contrast

Investing in emerging markets offer tempting advantages to investors. The volatile economies of countries considered to be in this category have a potential for extraordinary returns. A caveat to investors considering opportunities in emerging markets are the presence of unstable governments, the chance of nationalization, poor property rights protection, and large swings in prices. Emerging markets are far from a sure thing. But, despite high individual risk, emerging markets can reduce portfolio risk. The volatile economies of these countries have such low correlations compared to the domestic market that they actually provide the greatest degree of diversification.

Religion is an important element in Indonesian society. Investors should note that more than 90% population of Indonesia is Muslim which means the business must not break the Muslim doctrines. However, individual purchasing power increased with the strong economic growth in the past decade. The lifestyle of the younger generation changed and easily adopts the western consumer culture, which reduced the entry cost for foreign investors. For example, the

First time this phenomenon was presented by the economists Rajnish Mehra and Edward Prescott in 1985. They discovered that the return from US equity investments in comparison to the return from a risk free government securities had been much far above during the twentieth century to be interpreted by the traditional economic theories (Siegel and Thaler, 1997).

Emerging markets are often sought by investors due to their potential of returns higher than the more stable advanced economies. The markets often experience rapid economic growth as measured by gross domestic product. As in most situations, high returns often accompanied with high risk. The root of the higher risk in emerging economies often correlate with issues such as political instability, voids within the domestic

As a result, the correlation between consumption growth and stock returns is higher than average due to the high total wealth. Consequently, it is possible to see a positive correlation between the consumption and stock return (Li and Zhong 2010)

Economists have done a lot of work on the study of inflation. The Phillips curve has been the focus and the main line of the macroeconomic debate since the Second World War. The Phillips curve describes the trade-off relationship between inflation and unemployment. According to the rule of substitution between them, the government can implement flexible fiscal and monetary policy to realize the effective intervention and regulation of macroeconomics, i.e. raise the unemployment rate to reduce inflation rate or increase the rate of inflation to reduce the unemployment rate (Trevithick and Mulvey 1975). The Phillips curve has made outstanding contributions to the stable development of the capitalist economy. The traditional Phillips curve model is back-ward looking type model, using output gap and inflation lag to explain current inflation. It shows the relationship between the output gap and inflation, however, it is difficult to be consistent with empirical facts.

Many investors when making a decision regarding investing in a other country take into account certain factors which may play a very important role or may affect their future returns. Standard economics theory suggests that over the long run, profits or returns should rise in line with the economy/ economic growth, which is also the view point of many investors when making a decision.

Previous studies have given considerably less attention on the Asia countries, notably countries of Southeast Asia. Southeast Asia is becoming one of the bright spots for investment due to their fast-growing economy (OECD, 2014). Therefore, finding and understanding the pattern of changes in anomaly in these emerging markets would provide some ideas on investment strategies. Malaysia, Indonesia, Thailand and Philippines are the Southeast Asia countries that being included in MSCI Emerging Markets Index. Hence, this purpose of this study is to investigate the existence of January effect on these four emerging markets after financial crisis 2007-2008 and the possible causes for this calendar anomaly.

Political factors and macroeconomic indicators have earned an ever-increasing academic and public attention in influencing the financial health of a country since last few decades. The stock market performance is not an exception. For instance, two major political events, the ‘9/11 attack on the USA’ of 2001 and the ‘Arab spring movement’ in 2011 had down-turned the stock market performance markedly, signalling the compelled importance of investigating the impact of political conditions on stock market activities.

Parkin (2012: 522) described inflation as “a persistently rising price level” and price level as “the average level of prices, and the value of money”. A price increase would cause people to buy less, and a decrease in demand for products would cause prices to fall. Parkin (2012) said that expected inflation is promoting a healthy and a strong

H_0: The Viet Nam’s monthly stock price index is not influenced by American monthly stock market index and Viet Nam’s monthly exchange rate.

Adam and Tweneboah (2008) analyzed the impact of Foreign Direct Investment (FDI) on stock market development in Ghana. Market capitalization, FDI, stock market development and exchange rate variable are considered and found long-run relationship between FDI and stock market development in Ghana. Raza and Jawaid (2012) investigated the effects of foreign capital inflows and economic growth on stock market capitalization in 18 Asian countries by using the panel data from the period of 2000–2010 and found that foreign direct investment has significant negative and economic growth has significant positive relationship with the stock market capitalization, whereas, the results of workers’ remittances is found insignificant in long run. However, no causal relationship is found in between workers’ remittances and stock market capitalization. They suggested that investor should not idealize the inflow of workers’ remittances to