Stock markets of many emerging economies are dominated by institutional investors. The institutional investors buy/sell stocks...

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Stock markets of many emerging economies are dominated by institutional investors. The institutional investors buy/sell stocks in enormous quantities altering the price structure of many stocks. A study on the role of institutional investors in Malaysia revealed that, 'total shareholder returns of the 20 largest Government-linked Companies, controlled by Government-linked Investment Companies, are higher than the returns generated by FTSE Bursa Malaysia KLCI'. Required: a. Discuss whether the emerging markets could be considered as efficient markets. (8 Marks) b. Explain if institutional investors should be prevented from making bulk investments in the stock market. (8 Marks) c. Analyse if the institutional investors have the power to significantly influence the performance of holding companies. (9 Marks) Stock markets of many emerging economies are dominated by institutional investors. The institutional investors buy/sell stocks in enormous quantities altering the price structure of many stocks. A study on the role of institutional investors in Malaysia revealed that, 'total shareholder returns of the 20 largest Government-linked Companies, controlled by Government-linked Investment Companies, are higher than the returns generated by FTSE Bursa Malaysia KLCI'. Required: a. Discuss whether the emerging markets could be considered as efficient markets. (8 Marks) b. Explain if institutional investors should be prevented from making bulk investments in the stock market. (8 Marks) c. Analyse if the institutional investors have the power to significantly influence the performance of holding companies. (9 Marks)

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a Efficient Markets in Emerging Economies Efficient markets are characterized by all available information being quickly and accurately reflected in s... View the full answer