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Effectiveness of moving average rules during COVID-19 pandemic: evidence from Malaysian stock market

The COVID-19 outbreak significantly impacted the Malaysian stock market. To some extent, the Movement Control Order (MCO) implemented in the country affected the financial performance of listed companies. In consequence investors were quite uncertain of future movements of the stock market. Effe...

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Main Authors: Lee, Kelvin Yong Ming, Mohamad Jais,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2021
Online Access:http://journalarticle.ukm.my/17273/1/jeko_55%281%29-6.pdf
http://journalarticle.ukm.my/17273/
https://www.ukm.my/fep/jem/content/2021-1.html
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spelling my-ukm.journal.172732021-08-06T02:47:39Z http://journalarticle.ukm.my/17273/ Effectiveness of moving average rules during COVID-19 pandemic: evidence from Malaysian stock market Lee, Kelvin Yong Ming Mohamad Jais, The COVID-19 outbreak significantly impacted the Malaysian stock market. To some extent, the Movement Control Order (MCO) implemented in the country affected the financial performance of listed companies. In consequence investors were quite uncertain of future movements of the stock market. Effective analysis techniques are thus required to study the market movements. Investors shall rely on signals emitted by technical indicators for their investment decisions making. The aim of this study is to examine the performance of the MA rules in Malaysian stock market during the different stages of the MCO. The sample used comprised 30 largest market capitalization stocks listed in the stock market. The period of study spanned 2 January 2020 to 30 August 2020. More than 50% of the buy signals emitted by (5,60,0.01) were found linked with positive returns in the next trading day during the MCO and CMCO sub-period respectively. Conversely, 41.28% and 34.78% of the sell signals emitted by (5,50,0.01) during the respective MCO and CMCO sub-period were linked with negative returns. Among all the MA rules, (5,60,0.01) generated the highest average return of 0.88% during the MCO and CMCO sub-period. Importantly, MA rules, (5,60,0.01) also generated positive returns during the out-of-sample period. The findings of this study shall contribute to the existing literature related to technical analysis. Besides that, the findings will benefit investors the most, inducing them to generate returns or avoid losses during the critical COVID-19 pandemic period. Investors are recommended to take the signals emitted by MA rules as alternative reference for their investments. Lastly, the relevant organizations should conduct more seminars to inform and enhance analytical skill of their clients, particularly retail investors. Penerbit Universiti Kebangsaan Malaysia 2021 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/17273/1/jeko_55%281%29-6.pdf Lee, Kelvin Yong Ming and Mohamad Jais, (2021) Effectiveness of moving average rules during COVID-19 pandemic: evidence from Malaysian stock market. Jurnal Ekonomi Malaysia, 55 (1). pp. 1-12. ISSN 0127-1962 https://www.ukm.my/fep/jem/content/2021-1.html
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description The COVID-19 outbreak significantly impacted the Malaysian stock market. To some extent, the Movement Control Order (MCO) implemented in the country affected the financial performance of listed companies. In consequence investors were quite uncertain of future movements of the stock market. Effective analysis techniques are thus required to study the market movements. Investors shall rely on signals emitted by technical indicators for their investment decisions making. The aim of this study is to examine the performance of the MA rules in Malaysian stock market during the different stages of the MCO. The sample used comprised 30 largest market capitalization stocks listed in the stock market. The period of study spanned 2 January 2020 to 30 August 2020. More than 50% of the buy signals emitted by (5,60,0.01) were found linked with positive returns in the next trading day during the MCO and CMCO sub-period respectively. Conversely, 41.28% and 34.78% of the sell signals emitted by (5,50,0.01) during the respective MCO and CMCO sub-period were linked with negative returns. Among all the MA rules, (5,60,0.01) generated the highest average return of 0.88% during the MCO and CMCO sub-period. Importantly, MA rules, (5,60,0.01) also generated positive returns during the out-of-sample period. The findings of this study shall contribute to the existing literature related to technical analysis. Besides that, the findings will benefit investors the most, inducing them to generate returns or avoid losses during the critical COVID-19 pandemic period. Investors are recommended to take the signals emitted by MA rules as alternative reference for their investments. Lastly, the relevant organizations should conduct more seminars to inform and enhance analytical skill of their clients, particularly retail investors.
format Article
author Lee, Kelvin Yong Ming
Mohamad Jais,
spellingShingle Lee, Kelvin Yong Ming
Mohamad Jais,
Effectiveness of moving average rules during COVID-19 pandemic: evidence from Malaysian stock market
author_facet Lee, Kelvin Yong Ming
Mohamad Jais,
author_sort Lee, Kelvin Yong Ming
title Effectiveness of moving average rules during COVID-19 pandemic: evidence from Malaysian stock market
title_short Effectiveness of moving average rules during COVID-19 pandemic: evidence from Malaysian stock market
title_full Effectiveness of moving average rules during COVID-19 pandemic: evidence from Malaysian stock market
title_fullStr Effectiveness of moving average rules during COVID-19 pandemic: evidence from Malaysian stock market
title_full_unstemmed Effectiveness of moving average rules during COVID-19 pandemic: evidence from Malaysian stock market
title_sort effectiveness of moving average rules during covid-19 pandemic: evidence from malaysian stock market
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2021
url http://journalarticle.ukm.my/17273/1/jeko_55%281%29-6.pdf
http://journalarticle.ukm.my/17273/
https://www.ukm.my/fep/jem/content/2021-1.html
_version_ 1707766998948118528
score 13.211869

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