A technical approach to equity investing in emerging markets

Massoud Metghalchi, Linda A. Hayes and Farhang Niroomand

Review of Financial Economics, 2019, vol. 37, issue 3, 389-403

Abstract: Technical analysis (TA) is used in evaluating its predictive power for the Morgan Stanley Capital International (MSCI) Emerging Market Index (EMI) that reflects 23 emerging market economies’ equity indices. We conclude strong predictive power of technical analysis for the EMI. Given this predictive power of TA, we then investigate whether investors can exploit this predictive power to beat the profitability of the Buy‐and‐Hold strategy considering both risk and transaction costs. Applying Moving Average, Relative Strength Index, Moving Average Convergence Divergence, and Rate of Change trading rules to the MSCI Emerging Market Index over the period of 11/1/1988 to 5/1/2017 reveals strong empirical evidence that investors could use TA to out‐perform the Buy‐and‐Hold strategy even when considering risk and transaction costs. This research provides evidence against the Efficient Market Hypothesis for EMI.

Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1002/rfe.1041

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:revfec:v:37:y:2019:i:3:p:389-403

Access Statistics for this article

More articles in Review of Financial Economics from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().