A survey of stock indicators used by stock brokers, investment banks and mutual funds at the Nairobi Stock Exchange (NSE)
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Date
2007-09Author
Nyalle, Lawrence
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Traders and investors use stock indicators to make investment decisions. The stock
indicators used by these players at the Nairobi Stock Exchange (NSE) are not known yet.
This study determines the nature and extent of usage of stock indicators by Stockbrokers,
Investment Banks and Mutual Funds at the NSE. Additionally, it determines the influence
of the profile of a firm on the choice of stock indicators used at the NSE. This study is
necessary because it takes the first step in determining the cross-sectional relationship
between stock indicators and stock prices at the NSE. Additionally, no such study has been
done at the NSE.
A linkert scale was used to collect data on the profile and usage of stock indicators from the
population of study that was comprised of 13 Stockbrokers, 5 Investment Banks and 6
Mutual Funds trading in the NSE during the years 2000 to 2006. Seventeen out of 24 firms
in the population responded to the questionnaire representing a response rate of 71%.
Mean, standard deviation, skewness, kurtosis and the Pearson's chi-square goodness of fit
tests were performed on the data collected.
The analysis showed that Price Averages were the mostly used stock indicators while
market indicators like the Coppock Indicator were among the stock indicators not used at all. The results of the chi-square test showed that the profile of the firm does not influence
the choice of stock indicators used at the NSE.
The policy implications of this study are the role the NSE & other interested parties should
play in regulation of Stockbrokers, Investment Banks and Mutual Funds. The study
provides an outline for developing guidelines to enhance the efficiency and effectiveness of
the players and the NSE. The policy implications may be generalizable to emerging
markets in Africa that are small in size and with nil or limited international integration.
Sponsorhip
University of NairobiPublisher
School of Business, University of Nairobi
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