Application of stock selection strategies on the Singapore market
Past research has shown that Value strategy can achieve higher returns as compared to Growth strategy. It also shows that the higher returns can further be improved by Fundamental Analysis strategy. This project examines whether the application of Fundamental Analysis can improve the existing return...
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| Format: | Final Year Project |
| Language: | English |
| Published: |
2016
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| Online Access: | http://hdl.handle.net/10356/68284 |
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| Institution: | Nanyang Technological University |
| Language: | English |
| Summary: | Past research has shown that Value strategy can achieve higher returns as compared to Growth strategy. It also shows that the higher returns can further be improved by Fundamental Analysis strategy. This project examines whether the application of Fundamental Analysis can improve the existing returns of Value stocks in the Singapore Market. My results show that Value strategy outperforms Growth strategy. I have also demonstrated that the mean returns earned by Value stocks increases by at least 7.3% annually after the application of Fundamental Analysis.
However, researchers contradict the explanation for reasons that Value stocks achieve higher returns. The results in this project shows a bias towards the explanation that investors tend to extrapolate past results of firms and hence, misprice them, rather than Value firms are fundamentally riskier.
Fundamental Analysis strategy was then applied to all of Singapore’s Stocks and appeared to be useful as the results shows an annual yield of 9.5% for good fundamental stocks. The higher returns were concentrated in smaller sized firms.
Overall, the results suggest that investors can apply strategies when investing stocks to improve their returns. |
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