Price Clustering in International Financial Markets during the COVID-19 Pandemic and Its Implications
Samuel Tabot Enow
The proliferation of trading strategies in many security markets has led to intense scrutiny of market price movements and their distribution. The increase in trading activities across financial markets around the world has enhanced the likelihood of behavioral biases and the tendency for stock prices to cluster around certain intervals. The purpose of this study was to investigate price clustering and psychological barriers in the NASDAQ Index, CAC 40 Index, DAX Index, JPX-Nikkei Index 400, SSE Index, and the JSE Index from 2/01/2020 to 31/12/2021, during the height of the COVID-19 pandemic. Using chi-square and a Kolmogorov-Smirnov tests, the findings revealed evidence of price clustering in the JPX-Nikkei 400 and JSE Index, with further evidence of psychological barriers in the form of support and resistance in the JSE Index. This result implies that a retracement entry strategy is suitable for the JPX-Nikkei Index 400 and JSE Index, and a breakout strategy should be used in the NASDAQ Index, CAC 40 Index, DAX Index, and SSE Index. Security markets should actively promote UTP in order to promote price efficiencies.
Keywords: Price Clustering, Psychological Barrier, Market Efficiency, Chi-Square, Kolmogorov-Smirnov Test, Financial Markets
External Debt and Foreign Investment: An Empirical Analysis on the Economy of Ghana
Gigamon Joseph Prah and Charles Ofori
This study considers the impact of Ghana’s heavy external debt on its ability to attract foreign investment. The study uses data covering the period from 1991 to 2019. Foreign investment is measured using net foreign direct investment inflows, while external debt is measured using two indicators: public and publicly guaranteed external debt stock and long-term debt stock. Using the ARDL, we found that both external debt indicators have a substantial negative long-run influence on foreign direct investment inflows. On the other hand, economic growth, measured by the gross domestic product, has a substantial positive effect on foreign direct investment inflows. External debt has a detrimental impact on foreign direct investment, while improvement in the country’s economic performance promotes foreign direct investment inflows. The implication is that when funds borrowed are well utilized for economic purposes, it will neutralize the negative consequences of the debt, and the improved economic performance shall augment foreign investment inflows. These findings are essential for most developing economies, especially the African countries, which heavily depend on foreign loans. Policymakers should focus on strategies such as human capital improvement, innovation, and strengthening their legal systems that improve economic performance.
Keywords: External Debt, Foreign Direct Investment, Economic Growth, Ghana
Stock Market Volatility in Zimbabwe Stock Exchange during Pandemic Period
Wellington Garikai Bonga, Ledwin Chimwai, Puruweti Siyakiya, and Ireen Choga
Volatility is essential to consider uncertainty surrounding investments in financial assets. For this reason, financial industry regulators, mutual fund managers, individual and institutional investors, and policymakers are concerned about volatility. Against this background, this paper investigates the volatility of returns on the Zimbabwean stock market between January 2020 and January 2022. We use the All Shares Index for Zimbabwe Stock Exchange (ZSE) for volatility analysis and perform the quantitative investigation using GARCH family models. According to the AIC and SIC criterion, we use the GARCH (1,1) model and perform a complete analysis considering the results obtained from EGARCH (1,1) and IGARCH (1,1) regressions. Results report persistence in volatility, showing that it takes time for the market to digest information into the prices fully, and the shocks to conditional variance take longer to die out. Also, an asymmetry exists, implying that bad news and good news impact differently on the stock market, and the magnitude of volatility due to the good news is higher than bad news. Therefore, we conclude that positive news of the same magnitude impacts more than bad news. Investors rely more on the good news for effective decisions during the pandemic to earn more. Considering the results, any policy aimed at reducing the impact of the pandemic is favorable for investment.
Keywords: ASI, Black Swan, COVID-19, GARCH, Investment, Pandemic, Stock Market, Volatility, Zimbabwe
Aksemsettin Mah. Kocasinan Cad.
Erenoglu Is Merkezi
Fatih – Istanbul, TURKEY
Email: [email protected]
This work is licensed under a Creative Commons Attribution 4.0 International License.