Advanced Financial Management

The assessment aims in identifying the significance of technical and fundamental analysis by preparing two defence types of portfolios and analysing it in a period. The result analysis section depicts the overall performance of the two created portfolio and depicted, whether they beat the market or not.

Running head: ADVANCED FINANCIAL MANAGEMENT
Advanced Financial Management
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Introduction:...............................................................................................................................2
Literature Review:......................................................................................................................2
Rational and Methodology:........................................................................................................4
Result and Analysis:...................................................................................................................5
i. Fundamental Analysis portfolio:.............................................................................................5
ii. Technical Analysis portfolio:.................................................................................................6
Conclusion:................................................................................................................................9
References and Bibliography:..................................................................................................10
Appendices:..............................................................................................................................13

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Introduction:
The assessment aims in identifying the significance of technical and fundamental
analysis by preparing two defence types of portfolios and analysing it in a period. This
evaluation would eventually allow the investor to identify the instruments, which can be used
for detecting investment opportunities. Moreover, for fundamental analysis we have used P/E
ratio and P/BV ratio for detecting stock, whose have higher value in P/E ratio and less than 1
value of P/BV ratio. Furthermore, the technical analysis uses the simple moving averages for
detecting the short-term trend in the stock and identifies the investment opportunities within
the constituents of S&P Indices for Singapore. Adequate discussion of the EMH and
behavioural financial are also conducted for identifying the investors mind set during the
evaluation period. The result analysis section depicts the overall performance of the two
created portfolio and depicted, whether they beat the market or not.
Literature Review:
The concept of EMH and Behavioural finance depicts the mindset of investors, while
conducting investment decisions. The efficient market hypothesis is mainly segregated in
three different levels, which are Strong form, Semi-strong form, and weak form of Efficient
Market Hypothesis. The different level of efficient Market Hypothesis directly indicates the
level of information, which is presented by the company to the investors. This transparency in
the information sharing process directly helps in improving the level of decisions, which is
made by the investors. Hence, with the strong form of efficient market hypothesis there is no
possibility of investors making abnormal returns, as the market discounts the news
adequately to portray the accurate share price of the stock. However, with the semi-strong
and weak form of Efficient market hypothesis the information flow from the company to the
investor is relevantly low, which increases the chance of some investors to make high end

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abnormal gains. The efficient market hypothesis directly increases the level price changes
that will be conducted on a stock after evaluating the relevant news. On the contrary, Bartos
(2015) argued that due the rigidity in the efficient market hypothesis the organisations and
investors were not paying attention to the declining value of the housing market before the
financial crisis of 2007. Hence, from the evaluation it could be indicated that with the
presence of efficient market hypothesis the information flow about the stock is consistent,
which helps in depicting the correct valuation of their share price.
The behavioural finance is the second concept, which is used by investors in making
relevant decision for their investment. In addition, the behavioural finance is a study of
psychology, which is used in making relevant decisions. The cognitive, emotional, cultural,
and social factors are some emotions, which is faced by the investor while making relevant
decisions. The different economic factors directly have impact on the investment decisions of
organisations. The theory also depicts the participants in the economy behave rationally,
where wealth maximisation is the only concept, which helps them improve the level of
returns from investment. Furthermore, the psychology of investors directly depicts the level
of investment, which they have conducted after evaluating the information. Hence, it could be
detected that investors take irrational decisions during investment, as they are influenced by
behavioural and psychological factors. In this context, Mouna and Jarboui (2015) stated that
the panic attributes of an investor instigate the large fluctuations in share price of stock within
a day, when financial position of the company declines. Therefore, the behavioural finance
directly explains the anomalies, which exist in the real world and where conventional
financial theories have no effect. The investors are keen on behaving differently to the same
information that is been provided to them, which instigates different price movement for the
stock. Hence, investors with the help of technical and fundamental analysis are able to gather

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relevant information regarding the current position of the stock, as it increases the probability
of high returns from investment.
Rational and Methodology:
The rational and methodology used in the preparation of the portfolio directly helps in
depicting the strategy, which has been used for selecting the stocks for investment purposes.
Two portfolios have been created for investment purposes, which has used fundamental and
technical methods in selecting the stocks. In this context, Dimpfl and Jank (2016) stated that
investors with the help of technical analysis are able to detect trends of the stock, which help
in pinpointing the stocks that could generate higher returns from investment. On the other
hand, Arthur (2018) indicated that fundamental analysis is used for long-term investment
purposes, as the investor banks on dividends and growth from their investments.
Moreover, the portfolio for fundamental analysis is created by using P/E ratio and P/B
ratio. The stocks with higher P/E ratio are selected, where its P/B ratio needs to lower than 1,
which mainly helps in detecting the level of returns that can be generated from investment.
The fundamental analysis is used on the basis of long term principles, where the stocks
selected for investment is aimed to generate higher returns from investment. The P/E ratio
directly indicates that growth prospects on stock, which can be used by investor to increase
their return from investment. Moreover, the P/B ratio is used for detecting price to book ratio,
where the values lower than 1 indicates that companies shares are undervalued and can be
used for investment purposes. Eiamkanitchat, Moontuy and Ramingwong (2017) stated that
with the use of fundamental analysis tool investors are able to formulate a portfolio, which
can boost the returns from investment.
In the similar context, technical analysis is used for selecting stocks that have short-
term investment opportunities. Therefore, investors detecting short-term trend could

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eventually improve the level of income that can be generated from investment, while
reducing the total risk from investment. The current portfolio is prepared by using moving
averages of 10 days and 30 days for detecting the investment opportunity. The stocks are
selected, when the moving average of 10 days crosses upwards from the moving average of
30 days. This process is used for detecting the investment opportunity in stocks and
formulating the portfolio, which can generate higher returns from investment. In this context,
Ewing and Malik (2016) stated that investors with the use of technical analysis is able to
understand the risk and return attributes of a stock before making any kind of investment
decisions.
Result and Analysis:
i. Fundamental Analysis portfolio:
Date Buy : 04/06/2018
S/N Company
Name Code Industry P/E P/BV
1
United
Engineers
Limited U04
Diversified
Real Estate
Activities 30.35x 0.84x -8.31%
Didn’t
BEAT
market
2
Sembcorp
Industries Ltd U96
Industrial
Conglomerates 30.27x 0.71x -5.52%
BEAT
market
3 Keppel REIT K71U Office REITs 21.90x 0.82x 0.08%
BEAT
market
4
Wheelock
Properties
(Singapore)
Limited M35
Real Estate
Development 21.16x 0.85x 26.81%
BEAT
market
5 OUE Limited LJ3
Diversified
Real Estate
Activities 17.41x 0.36x -4.38%
BEAT
market
6
Singapore
Airlines
Limited C6L Airlines 16.46x 0.81x
-
17.05%
Didn’t
BEAT
market
7
City
Developments
Limited C09
Diversified
Real Estate
Activities 14.38x 0.83x
-
19.07%
Didn’t
BEAT
market
8 Chip Eng C29 Construction 11.28x 0.65x - Didn’t

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Seng
Corporation
Ltd
and
Engineering 12.40%
BEAT
market
9
CapitaLand
Limited C31
Diversified
Real Estate
Activities 10.30x 0.74x -5.29%
BEAT
market
10
Sunningdale
Tech Ltd BHQ
Industrial
Machinery 10.07x 0.70x -0.91%
BEAT
market
-8.33%
Didn’t
BEAT
market
FTSE -6.49%
The above calculation depicts the returns, which has been provided from the
fundamental analysis portfolio. The calculation directly indicates that the loses from the
fundamental portfolio is at the levels of -8.33%, which is more than the loss depicted from
the FTSE ST ALL index during the period of 04-June-2018 to 24-August-2018. The stock
selection process used in the fundamental analysis was not accurate for short-term investment
process, which can be seen from the losses incurred from investment. In addition, the decline
in the current valuation system for fundamental analysis can be used for long-term
investment situations. Moreover, from the listing of 10 stocks, only 4 of the stocks did not
beat the market, where the market is considered the returns from FTSE ST ALL which is at
the level so of -6.49%. Hence, the total fundamental portfolio was not able to beat the market,
as the losses from investment inclined and crossed the threshold of -6.49% obtained by FTSE
ST ALL. In this context, Fagereng, Gottlieb and Guiso (2017) stated that investors with long
time investment horizon mainly uses the fundamental analysis approach, as in short duration
the stock does not provide the required level of returns.
ii. Technical Analysis portfolio:
No Company Name Transaction Profit/loss
1 BOC Aviation Limited Monday, June 4, 2018
$
(24,567.37)

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1 BOC Aviation Limited Wednesday, July 4, 2018
$
14,195.00
1 BOC Aviation Limited Wednesday, August 1, 2018
$
(14,994.91)
1 BOC Aviation Limited Friday, August 24, 2018
$
29,471.10
2 BW LPG Limited Monday, June 4, 2018
$
(17,715.74)
2 BW LPG Limited Monday, July 2, 2018
$
16,621.26
2 BW LPG Limited Friday, July 20, 2018
$
(17,826.40)
2 BW LPG Limited Monday, August 20, 2018
$
17,560.00
3
China Aviation Oil (Singapore) Corporation
Ltd Monday, June 4, 2018
$
(821.62)
3
China Aviation Oil (Singapore) Corporation
Ltd Monday, June 18, 2018
$
770.00
3
China Aviation Oil (Singapore) Corporation
Ltd Wednesday, August 1, 2018
$
(776.53)
3
China Aviation Oil (Singapore) Corporation
Ltd Friday, August 24, 2018 780
4 ComfortDelGro Corporation Limited Monday, June 4, 2018
$
(1,247.47)
4 ComfortDelGro Corporation Limited Wednesday, June 20, 2018
$
1,155.00
4 ComfortDelGro Corporation Limited Tuesday, July 17, 2018
$
(1,182.34)
4 ComfortDelGro Corporation Limited Monday, August 13, 2018
$
1,165.00
4 ComfortDelGro Corporation Limited Friday, August 24, 2018
$
1,155.00
5 Genting Singapore Limited Monday, June 4, 2018
$
(641.26)
5 Genting Singapore Limited Monday, June 18, 2018
$
605.00
5 Genting Singapore Limited Thursday, July 19, 2018
$
(641.26)
5 Genting Singapore Limited Wednesday, August 8, 2018
$
550.00
5 Genting Singapore Limited Friday, August 24, 2018
$
535.00
6 Mapletree North Asia Commercial Trust Monday, June 4, 2018
$
(597.34)
6 Mapletree North Asia Commercial Trust Friday, June 22, 2018
$
561.14
6 Mapletree North Asia Commercial Trust Monday, July 16, 2018
$
(597.34)
6 Mapletree North Asia Commercial Trust Friday, August 3, 2018
$
556.13
6 Mapletree North Asia Commercial Trust Friday, August 24, 2018
$
576.15
7 Singapore Press Holdings Limited Wednesday, July 11, 2018
$
(1,390.51)

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7 Singapore Press Holdings Limited Thursday, August 16, 2018
$
1,362.74
8 Soilbuild Business Space REIT Monday, June 4, 2018
$
(343.17)
8 Soilbuild Business Space REIT Tuesday, June 19, 2018
$
310.00
8 Soilbuild Business Space REIT Monday, July 16, 2018
$
(340.66)
8 Soilbuild Business Space REIT Thursday, July 26, 2018
$
310.00
9 Wilmar International Limited Monday, June 4, 2018
$
(1,653.28)
9 Wilmar International Limited Friday, June 22, 2018
$
1,560.00
9 Wilmar International Limited Monday, July 16, 2018
$
(1,518.01)
9 Wilmar International Limited Friday, August 24, 2018
$
1,605.00
10 Wing Tai Holdings Limited Monday, June 4, 2018
$
(1,037.05)
10 Wing Tai Holdings Limited Thursday, June 7, 2018
$
1,040.00
10 Wing Tai Holdings Limited Wednesday, July 18, 2018
$
(1,027.03)
10 Wing Tai Holdings Limited
Wednesday, August 15,
2018
$
975.00
Total Profit
$
4,499
Portfolio Value
$
50,000.00
Return 9.00%
The calculations conducted in the above table represent the portfolio, which has been
made by stocks listed in technical analysis portfolio. The calculations conducted in the above
portfolio depict the level of returns, which can be provided from technical analysis method.
In addition, the measures used in the formulation of the technical analysis portfolio was
fruitful, as returns from investment was positive and depicted higher returns from investment.
The returns of the portfolio are at the levels of 9.00%, while the market returns have declined
to the levels of -6.49%. According to Gay (2016), with the help of technical analysis
investors are able to detect short-term trend and investment opportunities, which could
increase the chance of short-term abnormal returns.

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Therefore, from the evaluation of the above two perilous, it could be detected that
technical analysis method can be used for generating higher revenue from investment. The
calculations have depicted that the portfolio created for fundamental analysis did not depict
the current financial trend, which was essential for understanding the short-term investment
scope. However, the technical analysis portfolio depicted the highest value for investment,
which can be used for generating high rate of return from the created portfolio.
Conclusion:
The calculations conduced in the above assessment mainly depicts the significance of
technical analysis over fundamental analysis, which can be used by investor for maximising
the returns from investment. In addition, the method used for the selection of technical
analysis and fundamental analysis portfolio were accurate. However, only technical analysis
was able to beat the market, while fundamental analysis lost, as the trading period was short
and did not support the requirements of fundamental analysis. Moreover, technical analysis
was mainly helpful in improving the returns from investment, as the prepared portfolio
increased returns and beat the market. Hence, investors could use the portfolio for improving
their current return generation capacity and raise the level of invested capital. Therefore, the
investors who are interested relying on the short-term trend of the stock can use technical
analysis method, while long-term investors can use the fundamental analysis method. Lastly,
The EHM and behavioural theory directly affects the decision-making capability of the
investor, when they are making investment decisions.

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References and Bibliography:
Arthur, W. B. (2018). Asset pricing under endogenous expectations in an artificial stock
market. In The economy as an evolving complex system II (pp. 31-60). CRC Press.
Au.finance.yahoo.com. (2018). Au.finance.yahoo.com. Retrieved 28 August 2018, from
https://au.finance.yahoo.com/quote/W05.SI/history?
period1=1527964200&period2=1535049000&interval=1d&filter=history&frequency
=1d
Bartos, J. (2015). Does Bitcoin follow the hypothesis of efficient market?. International
Journal of Economic Sciences, 4(2), 10-23.
Capitaliq.com. (2018). Capitaliq.com. Retrieved 28 August 2018, from
https://www.capitaliq.com/CIQDotNet/Index/Constituents.aspx?
CompanyId=226679791
Degutis, A., & Novickyte, L. (2014). The efficient market hypothesis: a critical review of
literature and methodology. Ekonomika, 93(2), 7.
Dimpfl, T., & Jank, S. (2016). Can internet search queries help to predict stock market
volatility?. European Financial Management, 22(2), 171-192.
Eiamkanitchat, N., Moontuy, T., & Ramingwong, S. (2017). Fundamental analysis and
technical analysis integrated system for stock filtration. Cluster Computing, 20(1),
883-894.
Ewing, B. T., & Malik, F. (2016). Volatility spillovers between oil prices and the stock
market under structural breaks. Global finance journal, 29, 12-23.

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Fagereng, A., Gottlieb, C., & Guiso, L. (2017). Asset market participation and portfolio
choice over the life‐cycle. The Journal of Finance, 72(2), 705-750.
Gay, R. D. (2016). Effect of macroeconomic variables on stock market returns for four
emerging economies: Brazil, Russia, India, and China. The International Business &
Economics Research Journal (Online), 15(3), 119.
Lim, S., Oh, K. W., & Zhu, J. (2014). Use of DEA cross-efficiency evaluation in portfolio
selection: An application to Korean stock market. European Journal of Operational
Research, 236(1), 361-368.
Mensi, W., Hammoudeh, S., & Kang, S. H. (2015). Precious metals, cereal, oil and stock
market linkages and portfolio risk management: Evidence from Saudi
Arabia. Economic Modelling, 51, 340-358.
Mouna, A., & Jarboui, A. (2015). Financial literacy and portfolio diversification: an
observation from the Tunisian stock market. International Journal of Bank
Marketing, 33(6), 808-822.
Schwager, J. D., & Etzkorn, M. (2017). 50 Market Wizard Lessons. A Complete Guide to the
Futures Market: Technical Analysis, Trading Systems, Fundamental Analysis,
Options, Spreads, and Trading Principles, Second Edition, 575-587.
Schwager, J. D., & Etzkorn, M. (2017). Selecting the Best Futures Price Series for System
Testing. A Complete Guide to the Futures Market: Technical Analysis, Trading
Systems, Fundamental Analysis, Options, Spreads, and Trading Principles, Second
Edition, 279-287.

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Syriopoulos, T., Makram, B., & Boubaker, A. (2015). Stock market volatility spillovers and
portfolio hedging: BRICS and the financial crisis. International Review of Financial
Analysis, 39, 7-18.
Wang, Y. (2016). Construction and simulation on stock price forecasting model based on
fundamental analysis and technical analysis. RISTI (Revista Iberica de Sistemas e
Tecnologias de Informacao), (E10), 295-304.
Yao, J., Ma, C., & He, W. P. (2014). Investor herding behaviour of Chinese stock
market. International Review of Economics & Finance, 29, 12-29.

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Appendices:

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Stamp duty 0.20%
Fundamental Analysis
Date Buy : 04/06/2018 SGD
S/N Company Name Code Industry P/E P/BV BUY BUY SHARE
1 United Engineers Limited U04 Diversified Real Estate Activities 1,607.26 509.95 30.35x 0.84x $ 2.820 1000
2 Sembcorp Industries Ltd U96 Industrial Conglomerates 5,020.31 10,044.02 30.27x 0.71x $ 2.960 2500
3 Keppel REIT K71U Office REITs 4,056.23 287.1 21.90x 0.82x $ 1.180 2983
4 Wheelock Properties (Singapore) Limited M35 Real Estate Development 2,656.36 427.16 21.16x 0.85x $ 1.740 2500
Mkt. Cap.in S$
mm
Tot. Rev.in
S$ mm

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Stamp duty 0.20%
Technical Analysis
Date Buy : 04/06/2018 SGD
No Company Name Transaction Buy/Sell No of shares Share price Total cash in
1 BOC Aviation Limited Monday, June 4, 2018 Buy 509 48.15$
1 BOC Aviation Limited Wednesday, July 4, 2018 Sell 300 47.35$ 14,205$
1 BOC Aviation Limited Wednesday, August 1, 2018 Buy 300 49.85$
1 BOC Aviation Limited Friday, August 24, 2018 - 509 57.90$ 29,471.10$
2 BW LPG Limited Monday, June 4, 2018 Buy 502 35.20$