Test of the weekend effect of the Uganda securities exchange

Abstract

Stock market behavior is very crucial in stock returns predictability. The Ugandan capital market has become more dynamic in the recent past and Ugandan population has also become more knowledgeable. Investors are not assured of superior returns when earning power has increased but the time and day of the month can also play a key role. It is in this regard that the knowledge of market variations is of paramount importance. This would in turn signal the right time to buy or sell stocks in the market. The aim of this study was to test whether weekend effect exist at Uganda Securities Exchange. The study used historical data obtained from USE. The period under review was from 1st September, 2008 to 31st August, 2010. The data obtained was daily closing and opening prices of stocks at the Exchange. These data was used to calculate the daily returns of the stocks at USE. The data obtained was of census type since all the companies that were listed during the study period were considered. The analysis was done by comparing and analyzing returns on Mondays, Tuesdays and Thursdays. Dummy regression multiple regression method was used. With the use of Excel program the researcher was able to deterimine the significance of the model. The research found out that weekend effect did not exist at the securities exchange over the period under review. In conclusion therefore, we can say that Uganda Securities Exchange like many other emerging financial markets for example Nairobi Stock Exchange do not exhibit weekend effect anomaly.