“Robertson M and van Rensburg P (2004), ” The Interaction between Sectors, Styles and JSE Returns”, Journal of Studies in Economics and Econometrics”

Abstract: This study investigates whether style characteristics exhibit different properties across the major JSE industry sectors. Using monthly data on a broad sample of non-thinly traded JSE shares over the period July 1990 to June 2000, it is observed that a large proportion of financial ratios exhibit right skewness that is related to a lower bound of zero on their values. Financial ratios that incorporate levels of debt are markedly higher in the financial sector. It is argued that, as deposit-taking institutions, the market interprets leverage differently for these companies. Stock returns are regressed cross-sectionally on lagged style characteristics in each month using a dummy variable to indicate sector membership. The results show that, to varying degrees, small size and several interrelated measures of „value‟ exhibit a positive relationship with equity returns within all industry sectors. However, the value effects tend to be stronger in the financial and industrial sectors than in the resource sector. In contrast to the other sectors, financial stock returns are positively rewarded for high debt-to-equity ratios. Notwithstanding the above, it is concluded that, a size and price-earnings style-based model of expected returns is broadly representative of the entire JSE Securities Exchange.

Research Papers

The inflation hedging properties of South African and international asset classes

ABSTRACT Within the period 1965 to 2015 all domestic asset class returns (except cash) are found to exhibit negative correlations with the contemporaneous inflation rate. Cash has hedging qualities due to Reserve Bank inflation targeting policy action but has a low real yield. Furthermore, Engle-Granger cointegration tests show that none of the asset class prices […]

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Diversification and the realised volatility of equity portfolios

ABSTRACT In Markowitz’s (1952) portfolio theory, a reduction in volatility for a given level of expected return is implied as being equivalent to an increase in diversification. The recent development of risk-based portfolio construction methods, which emphasise diversification separately from volatility reduction, challenges this equivalence. Using a point-in-time database of liquid equities listed on the […]

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Common Firm-specific characteristics of extreme performers on the Johannesburg Securities Exchange

ABSTRACT In this study we investigate the common firm-specific factors associated with shares that experience extreme monthly performance on the Johannesburg Securities Exchange. READ MORE

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