Equity Analysis in Buying Company Shares on the Philippine Stock Exchange

Abstract

Objective - Less than 1% of the population in the Philippines has invested in the stock market (PSE, 2016). The Philippine Stock Exchange (PSE) has been in operation since 1927 and is one of the oldest in the Asia Pacific. The primary objective of this research is to examine the investing techniques of online users using technical and fundamental analysis. Methodology/Technique - A chi-square test is used to determine if there is a significant difference between the expected frequencies and the observed frequencies in one or more categories. The research probes the relationship of the demographic profiles of respondents and their investment behavior using the Friedman's test. Findings - The descriptive statistics show the frequency counts of 418 observations and the corresponding chi-square test for the distribution-free data. The analysis of variance by ranks was used to reflect the Friedman test for the hierarchy of perception of the respondents per given variable. The chi-square test (χ2 (df = 4, ρ = 0.001) = 53.603) shows that actual observations on the relative valuation (86, 48, 130, 99, and 55) is significantly different from a uniform fit of 84 observations at 4 degrees of freedom and 5% level of significance. Novelty – Hence, the study concluded that investors prefer a relative valuation equity selection strategy using fundamental analysis. Furthermore, the study concludes that the moving average (36, 11, 80, 95 and 196) is preferred by investors using technical analysis. Type of Paper - Empirical. Keywords: Fundamental Analysis; Technical Analysis; Investment Behavior; Philippine Stock Exchange; Relative Valuation; Moving Average. JEL Classification: G10, G14, G19.