Investment Opportunities Research Articles

Practice Briefing: The inception and preliminary performance analysis of REITs in the Kingdom of Saudi Arabia

PurposeThe Saudi REIT market’s introduction in 2016 was part of the Kingdom of Saudi Arabia’s Vision 2030 master plan to diversify the country's sources of revenue and reform its financial sector. Despite the Saudi REIT market’s nascent state, it has experienced significant growth in a short period of time, being the largest REIT market in MENA. Saudi REITs are designed using well-established global REIT standards to facilitate efficient capital influx into commercial property investment opportunities in Saudi Arabia. The core aim of this paper is to highlight the development of Saudi REITs and empirically assess their performance over the period from December 2018 to December 2023.Design/methodology/approachUsing monthly total returns in local currency (SAR), the risk-adjusted performance and portfolio diversification attributes of Saudi REITs are assessed. A series of optimal portfolios are constructed to identify the potential added-value role of Saudi REITs in a multi-asset framework.FindingsWhilst Saudi REITs’ average annual return performance is lower than that of stocks, their annual returns are delivered with less volatility, thus giving a competitive overall risk-adjusted performance against other asset classes. This is a testament to Saudi REITs’ higher income return performance due to the fiscal-efficient framework. Further, when Saudi REITs are introduced in a stocks-bonds portfolio, they are able to improve the portfolio’s overall return whilst reducing the volatility, with their allocation in the asset mix observed to effectively scale throughout the portfolio risk-return spectrum.Practical implicationsSaudi REITs are an emerging investment opportunity for investors seeking exposure in a relatively stable and fast-growing MENA property market. As Saudi Arabia makes continuous reforms to improve the accessibility and transparency of its commercial property market, Saudi REITs are the most effective way to date for domestic and overseas investors to obtain exposure to the Kingdom’s property investment opportunities. Importantly, the encouraging preliminary results as identified in this paper provide valuable insight into the potential trajectory of Saudi REITs, given their significant contributing role to achieve the strategic objectives of Vision 2030.Originality/valueThis paper is the first empirical investigation that provides a preliminary performance validation of Saudi REITs as a listed pathway to commercial property exposure in Saudi Arabia. This study provides empirical evidence that enables more informed and practical decision-making in property investment, particularly in understanding the strategic importance of Saudi REITs within an investment portfolio.

The current state, opportunities and challenges for upscaling private investment in biodiversity in Europe.

European countries have committed to ambitious upscaling of privately funded nature conservation. We review the status and drivers of biodiversity finance in Europe. By implementing semistructured interviews with 25 biodiversity finance key informants and three focus groups across Europe, we explore opportunities and challenges for upscaling private investment in nature. Opportunities arise from macroeconomic and regulatory changes, along with various technological and financial innovations and growing professional experience. However, persistent barriers to upscaling include the ongoing lack of highly profitable investment opportunities and the multitude of risks facing investors, including political, ecological and reputational risks influencing supply and demand of investment opportunities. Public policy plays the foundational role in creating and hindering these mechanisms. Public policy can create nature markets and investment opportunities, meanwhile agricultural subsidies and poor coordination between public funding sources undermine the supply of return-seeking investment opportunities. Investors demand derisking investments from uncertainties; in part caused by political uncertainty. These markets require profound state intervention to enable upscaling whilst achieving positive ecological outcomes; private investment will probably not upscale without major public policy change and public investment.

Machine Learning-Based Detection and Analysis of Suspicious Activities in Bitcoin Wallet Transactions in the USA

The dramatic adoption of Bitcoin and other cryptocurrencies in the USA has revolutionized the financial landscape and provided unprecedented investment and transaction efficiency opportunities. The prime objective of this research project is to develop machine learning algorithms capable of effectively identifying and tracking suspicious activity in Bitcoin wallet transactions. With high-tech analysis, the study aims to create a model with a feature for identifying trends and outliers that can expose illicit activity. The current study specifically focuses on Bitcoin transaction information in America, with a strong emphasis placed on the importance of knowing about the immediate environment in and through which such transactions pass through. The dataset is composed of in-depth Bitcoin wallet transactional information, including important factors such as transaction values, timestamps, network flows, and addresses for wallets. All entries in the dataset expose information about financial transactions between wallets, including received and sent transactions, and such information is significant for analysis and trends that can represent suspicious activity. This study deployed three accredited algorithms, most notably, Logistic Regression, Random Forest, and Support Vector Machines. In retrospect, Random Forest emerged as the best model with the highest F1 Score, showcasing its ability to handle non-linear relationships in the data. Insights revealed significant patterns in wallet activity, such as the correlation between unredeemed transactions and final balances. The application of machine algorithms in tracking cryptocurrencies is a tool for creating transparent and secure U.S. markets. As virtual currencies gain increased acceptance and transactions become increasingly sophisticated, machine algorithms can provide processing capabilities for enhancing supervision and compliance operations. Complicated algorithms can be programmed to search through massive sets of transactional information, identifying trends that could be indicative of fraud and compliance failures. With the use of past data, such algorithms can become trained to detect abnormalities in real-time, and regulators and financial institutions can respond promptly to suspicious activity.

Investment Opportunity Set of Telecommunication Companies Reviewed from Financial Performance Aspects

The telecommunications industry in Indonesia has a strategic role in supporting economic development, especially in supporting economic activities between regions. This study aims to analyze the effect of Return on Asset (ROA), Debt to Equity Ratio (DER), and Sales Growth on Investment Opportunity Set (IOS) in telecommunications companies listed on the Indonesia Stock Exchange (IDX) for the period 2015-2020. This study uses a quantitative method with secondary data obtained from the companies financial statements through the official IDX website. Data analysis was carried out using multiple linear regression with the help of SPSS software. The results of the study show that ROA and DER have a significant effect on IOS, while Sales Growth does not have a significant effect partially. Simultaneously, the variables ROA, DER, and Sales Growth have a significant effect on IOS. This study provides implications that the companies financial performance, especially in increasing ROA and managing DER, can increase investment opportunities. Further studies are expected to expand the research variables by using intervening variables for a more comprehensive understanding.

Behavior of Housewives in Family Financial Management in Makassar City

This qualitative research uses a phenomenological approach to explore the role of housewives in Makassar in family financial management. The results revealed that they play a very strategic role, especially in the midst of the city's evolving economic dynamics. Housewives are faced with various challenges, such as unstable income, consumptive culture, and social demands, all of which affect their spending and saving patterns. By prioritising basic needs, children's education and social solidarity, many housewives successfully combine traditional and modern values in managing their family finances. While they are beginning to utilise financial technology and digital services, many still face barriers due to limited digital literacy. Therefore, improving financial education is crucial so that they can better budget, manage debt and capitalise on investment opportunities. This is expected to support the economic stability of families as well as improve the overall well-being of the community.

The emergence of civil aviation as critical public sector in Nigeria: an industry from grass to grace

Transport and aviation sector play critical roles in the economy of any nation at both local, regional, and continental level. These are in the form of job creation and multiplying effect on other sectors. This study distinguished the sector as the opener of any national aspiring economy thereby creating opportunity for Foreign Direct Investment (FDI), globalisation, simplification of trade, tourism and the overall national development. The paper adopted a descriptive research design to make description, summarization and report the situational activities and nature of the development of transportation and civil aviation sector in Nigeria. Relevant literature was carefully selected and review was done using a “Systematic Review Approach.” It exposed the fundamentality in transport and aviation development history that engenders infrastructural development, safety and security assurance which is the hallmark of transportation business. It concluded that the emergence of transportation and civil aviation changed the dynamics of business activities and urban development in Nigeria. The paper illustrated a different perspective of the earliest mode of transportation, emergence of civil aviation in Nigeria and its contribution to national development. It recommended the prioritization of transport and aviation infrastructural development in the annual and supplementary budget of Nigeria, and training and retraining of aviation personnel to close the gap of manpower deficit and among others.

Impacts of patent pledge financing on corporate investment: Evidence from a quasi-natural experiment in China

Patent pledge financing (PPF), emerging as the unification of knowledge capital and financial resources, not only enhances the value of firms' intellectual property but also offers new insights into addressing corporate financing challenges. However, the impact of PPF on corporate investment remains unclear. This study utilizes data from Chinese A-share listed companies to assess how the implementation of PPF pilot policies influences corporate investment through the construction of a difference-in-differences model. We reveal that the PPF pilot policies have significantly stimulated corporate investment by lowering debt financing costs and concurrently expanding investment opportunities. Subsequent analyses suggest that the impact of PPF pilot policies on corporate investment is more pronounced for companies facing higher financing constraints, possessing greater patent value, and operating in regions with lower levels of financial development. This research provides empirical support for the notion that financial innovation mitigates corporate financing challenges and fosters economic growth.

Liquidity indicators, fund utilization efficiency, and their impact on profitability in commercial banks

This research discusses the relationship between liquidity measures, namely, cash liquidity and legal liquidity, the legal reserve ratio on economic fund utilization as reflected in the granting of credit facilities, investments, and deposits, and their impact on profitability amongst the selected Jordanian commercial banks (JCB) that are listed on the Amman Stock Exchange (ASE). The applied methodology adopts financial reports and statements from 12 JCB during the period starting from 2011 to 2022. Analysis of the multiple measures of the methodologies used to test these relationships was done using multiple regression analysis as the main statistical tool. Results show a significant correlation between cash liquidity and legal liquidity measures and efficiency of funds utilization in the banks under review. Yet no statistically significant relationship was found between the legal reserve ratio and fund utilization efficiency. Furthermore, the study establishes a strong relationship between fund utilization efficiency and return on assets (ROA) and between cash liquidity and legal liquidity measures and ROA. On the other hand, the legal reserve ratio had no meaningful correlation with the ROA. These findings will help the JCB to keep a good balance between liquidity management and profitability maximization. Proper allocation of the existing liquidity level in lending to credit facilities and several investment opportunities is going to generate sustainable financial returns with perpetual cash flow. Moreover, the study suggests that an informed scientific approach to adequate fund allocation would enable banks to maximize profitability with an acceptable risk profile while complying with the liquidity requirements set forth by financial regulators. Such balance is important to become compliant with the guidelines set forth by the wider financial system towards ensuring financial stability and sustainability.

INVESTMENT ATTRACTIVENESS OF UKRAINE AND EU SUPPORT DURING CRISIS PERIODS

The study of Ukraine’s investment attractiveness during periods of crisis highlights the significant influence of external factors on the investment situation in the country, particularly regarding the inflow of Foreign Direct Investment (FDI). In the context of global and local crises such as the COVID-19 pandemic and Russia’s military invasion, Ukraine’s economic situation has experienced significant fluctuations, which have reflected on the investment climate. European Union countries play a key role in providing financial support, which is an important factor in stabilizing Ukraine’s economy during this period. The aim of this research is to assess investment flows from EU countries and the investment attractiveness of Ukraine during crisis times. One of the key aspects of the study is analyzing the dynamics of FDI from EU countries. During the analyzed period, the volume of investments fluctuated significantly, indicating the instability of the investment environment. The largest investments in Ukraine come from the Netherlands and Germany, indicating the long-term interest of these countries in the Ukrainian market despite the crisis periods. Despite difficulties, 57% of companies already operating in Ukraine plan to continue their investments, and 79% are ready to contribute to the country’s reconstruction after the war. This emphasizes the potential for economic recovery in the future, particularly due to international support. The methodology of the research includes both quantitative and qualitative methods of analysis, particularly statistical and comparative analysis. The practical value of the article lies in identifying the main factors affecting changes in the investment situation in Ukraine during crisis periods, as well as in developing recommendations to improve the investment climate. To enhance investment attractiveness and stabilize Ukraine’s economy, it is crucial to continue reforms in the legal system, combat corruption, and improve the business climate through deregulation and simplification of administrative procedures. Additionally, Ukraine needs to actively work on infrastructure recovery plans, which will create new investment opportunities. The success of these measures depends on achieving stability and security, which form the basis for Ukraine’s economic development in the future.

Selection effects in the births of mutual funds

AbstractNewborn funds disproportionately hold popular stocks, representing long‐lived strategic choices. This suggests that when choosing strategies in which to launch new funds, families do not consider only expectations for their own performance but also consider investor sentiment toward those strategies. The two motives for entry result in an interaction effect between competitive entry and strategy popularity, which affects performance and flows for both existing and newborn funds. Newborn funds' expectations for performance are partly driven by fund manager skill in those strategies, but this is not the only factor, leaving a role for time‐varying investment opportunities.

How do Islamic corporate social responsibility and environmental performance relate to company value?

Purpose – This study aims to provide a comprehensive analysis of the impact of the investment opportunity set (IOS), profitability, Islamic corporate social responsibility (ICSR), and environmental performance (EP) on the value of environmentally sensitive companies. The research explores both short-term and long-term impacts of these variables on corporate value. Methodology – This study utilized Vector Error Correction Model (VECM) approach to analyze annual data from 2016 to 2022, focusing on environmentally sensitive companies in the Indonesian Sharia stock index. Findings – The VECM method yielded several key findings, including no significant impact of IOS on company value in either short or long term. However, variables such as ICSR, environmental performance, and profitability exhibited a significant influence on company value over the same timeframe.Implications – This study suggests that, to enhance credibility, companies should prioritize financial stability, credibility in financial reporting, social responsibility, and environmental regulations. They should identify the best investment opportunities and collaborate with the government to achieve environmental sustainability.Originality – Our study seeks to delve into the relationship between several variables, including IOS, profitability, ICSR, environmental performance, and the overall value of environmentally sensitive companies. This topic has not been explored in-depth by previous research, and our study aims to shed light on both short- and long-term effects of these factors on corporate value.

Investment Opportunities for mRNA Technology in Low- and Middle-Income Countries: Key Findings and Future Perspectives

Investment Opportunities for mRNA Technology in Low- and Middle-Income Countries: Key Findings and Future Perspectives

Financializing Maternal and Newborn Care: Temporal Tensions within a Development Impact Bond in India

ABSTRACTSince the 1980s, multilateral agencies and governments in many parts of the world have curtailed public spending for the health sector. The same period also witnessed the emergence of ‘innovative’ health financing approaches which combine social service provision with financial return. This article discusses one such mechanism, the first health‐focused development impact bond (DIB) implemented in India in 2018–21. Drawing on interviews with key actors and analyses of documents and reports, the article examines the transformation of maternal and newborn care into an investment opportunity. It argues that DIBs introduce the prospect of financial return in the provision of social services while at the same time imbuing financial investments with the promise of moral value. After situating the impact bond within broader global trends in health financing and India's specific history, the article illustrates the processes of valuation involved in converting maternal and newborn care into a financial asset. In doing so, it highlights the tensions that emerge when healthcare is made amenable to the logic and time horizon of finance capital. The article concludes with a discussion of the possible long‐term consequences of financialization in the health sector, emphasizing the new vulnerabilities and inequalities that DIBs generate, particularly outside financial centres in the Global North.

Perceptions of asset managers on corporate social responsibility challenges and opportunities

Purpose: Companies and investors in South Africa are challenged with multiple sustainability concerns. Asset managers have substantial power to motivate investee companies to focus on pressing corporate social responsibility (CSR) issues. Yet, there is limited scholarly evidence on how they process CSR information and which sustainability considerations influence their decisions. Therefore, the CSR challenges and opportunities that selected South African asset managers experience were explored.Design/methodology/approach: Semi-structured interviews were conducted with 26 South African asset managers. Thematic analysis was conducted to derive four main themes.Findings/results: Four considerations were identified on which the considered asset managers based their responsible investment decisions when reflecting on CSR practices. Firstly, CSR should form part of a company’s primary purpose. Secondly, the interviewees focussed on material industry-specific CSR risks when making investment decisions. Thirdly, the inclusion of CSR practices in asset managers’ decision-making was hindered by the relatively small South African investable market, a limited demand for responsible investments from asset owners and beneficiaries, and insufficient disclosure of material sustainability information. Lastly, the interviewees highlighted social and economic infrastructure investment opportunities. Furthermore, they mentioned that CSR practices can be improved by refined regulation and educating asset owners and beneficiaries.Practical implications: Corporate leaders are urged to increasingly engage with asset managers and collaborate with stakeholders from the private sector to address prominent sustainability issues and to capitalise on related opportunities.Originality/value: This research contributes four considerations to the limited body of knowledge on the unique CSR challenges and opportunities pertaining to the investment decisions of an influential stakeholder group, namely asset managers in South Africa.

Time-consistent investment strategy for a DC pension plan with the return of premiums clause and mispricing

This paper investigates the time-consistent investment strategy for a defined-contribution (DC) pension plan with the return of premiums clause and mispricing under the mean-variance criterion. During the accumulation phase, the members of the DC pension plan contribute a fixed proportion of their stochastic income into the DC pension account as premiums. The investment opportunity set consists of a market index, a risk-free asset and a pair of mispriced stocks. The dynamics for the expected return rate of the mispriced stocks and the mispricing feature are described by mean-reverting stochastic processes. Moreover, if the DC pension plan members die during the accumulation phase, their beneficiaries are allowed to withdraw the accumulated premiums at a predetermined interest rate, that is, a return of premiums clause is introduced. Under a game theoretic framework, the explicit expressions of the time-consistent investment strategy and the corresponding value function are derived. Numerical examples are presented to illustrate our derived results. Some key findings include: (i) as the growth of the predetermined interest rate accumulated by the premiums, the proportion invested in the market index rises; (ii) larger mispricing increases the portfolio's absolute positions in each stock; (iii) under the given expected terminal wealth, strong market liquidity significantly reduces the investment risk for the DC pension plan.

Navigating Sector Momentum: Evaluating Performance in the US and Global ETFs for Retail Investors

Modern day investing comes with too many options and complexities for non-professional investors. An easy way for them to earn acceptable returns is investing in market index exchange-traded funds (ETFs). However, the previous research suggests that they can achieve superior results by using a simple sector momentum strategy. The aim of this study is to examine whether those conclusions remain when a different data set is used as well as to assess the performance attribution of such a strategy. The research is based on two sets of sector ETFs, which are focused on the US market and on the global market, in order to investigate whether the results are applicable in both cases. For each of them the performance measures were calculated, and the factor analysis was performed. The results suggest that the sector momentum strategies achieve superior results than the benchmark, though there is not one universally optimal strategy for every investor and for every investment opportunity set. The factor analysis confirms that the strategy generates alpha and that its performance cannot be explained by traditional factors fully. Therefore, the study further supports the use of sector momentum investing, especially for retail investors, though it has its limitations, e.g. the neglect of transaction costs.

Investment Opportunity Set in Consumer Goods Companies: The Role of Liquidity and Profitability in Investment Decision-Making

This study aimed to analyze the effect of liquidity and profitability on investment opportunities set in consumer goods sector companies listed on the Indonesia Stock Exchange. The research was conducted in consumer sector companies listed on the Indonesia Stock Exchange. The data analysis technique in this study uses qualitative data analysis based on the results of interviews, observations, and documentation. The findings in the study indicate that liquidity proxied by the Current Ratio has a negative and insignificant effect on the Investment Opportunity Set (IOS) in consumer sector companies listed on the Indonesia Stock Exchange for the period 2018-2023. Conversely, profitability proxied by Return on Equity (ROE) shows a positive and significant influence on the Investment Opportunity Set (IOS) in consumption sector companies in the same period. This finding confirms that profitability is the main factor driving the company's investment opportunities, while liquidity has no significant role in influencing IOS. The research results are expected to assist company commissioners in improving corporate financial governance to be more competitive, support financial performance, and ensure the stability and sustainability of corporate control.

THE EFFECT OF COMPETITION IN THE PRODUCT MARKET AND FINANCIAL FLEXIBILITY ON BUSINESS STRATEGY: A PAKISTANI CONTEXT

Purpose: This study examines the relationship between competition in the product market (PMC), financial flexibility (FF), and business strategies in Pakistan, providing both theoretical and practical implications for companies. It contributes to the body of knowledge on strategic management, particularly related to emerging markets, and addresses the institutional voids impacting firms. Design/Methodology: For data collection, 200 companies listed on the Pakistan Stock Exchange (PSX) were chosen via using the systematic elimination method for 2010-2020. Since the study involved binary dependent variables, probit and logit regression models were applied to test the hypothesis. The study adopted Ittner and Larcker (1997), Herfindahl-Hirshchman Index (HHI), and Frank and Goyal (2009) models to assess Business Strategy, PMC, and FF respectively. Findings: PMC has a significant impact on companies to adopt a certain business strategy (i.e., defensive, opportunistic, analytical, and invasive) and the level of financial flexibility. Similarly, financial flexibility provides companies to adapt defensive and opportunistic strategies, and it also make companies decrease the adaptation of analytical and invasive strategies. Originality: This study endeavors to provide a significant insight for companies to focus on the importance of PMC and keep track of their level of financial flexibility. The study also suggests that exploring the opportunities of investment, which are competitive in nature, can be effective and helpful in selecting the appropriate business strategy. Following this roadmap, companies can better be able to maximize their performance and value to sustain their competitiveness.

Оценка инвестиционного потенциала Северного Кавказа

The assessment of the investment potential of the North Caucasus is an urgent task in the context of the strategic development of the Russian Federation. The region has unique natural resources, cultural diversity and geographical location, which creates the basis for the development of many industries, including tourism, agro-industrial complex and energy. At the same time, despite significant natural and human resources, the region faces a number of economic and social challenges that may make it difficult to attract investment. The purpose of this study is to assess the investment potential of the North Caucasus. The study of the investment climate in the North Caucasus makes it possible to identify not only existing barriers, but also potential opportunities for investors. Problems such as insufficient infrastructure, social instability, and a lack of qualified personnel require attention from both government agencies and the private sector. At the same time, investment attractiveness can be improved by creating favorable business conditions, including tax incentives, support for small and medium-sized businesses, and the development of infrastructure improvement programs.

Automated Bitcoin Trading dApp Using Price Prediction from a Deep Learning Model

Distributed ledger technology (DLT) and cryptocurrency have revolutionized the financial landscape and relevant applications, particularly in investment opportunities. Despite its growth, the market’s volatility and technical complexities hinder widespread adoption. This study proposes a cryptocurrency trading system powered by advanced machine learning (ML) models to address these challenges. By leveraging random forest (RF), long short-term memory (LSTM), and bi-directional LSTM (Bi-LSTM) models, the cryptocurrency trading system is equipped with strong predictive capacity and is able to optimize trading strategies for Bitcoin. The up-to-date price prediction information obtained by the machine learning model is incorporated by custom oracle contracts and is transmitted to portfolio smart contracts. The integration of smart contracts and on-chain oracles ensures transparency and security, allowing real-time verification of portfolio management. The deployed cryptocurrency trading system performs these actions automatically without human intervention, which greatly reduces barriers to entry for ordinary users and investors. The results demonstrate the feasibility of creating a cryptocurrency trading system, with the LSTM model achieving a return on investment (ROI) of 488.74% for portfolio management during the duration of 9 December 2022 to 23 May 2024. The ROI obtained by the LSTM model is higher than the performance of Bitcoin at 234.68% and that of other benchmarking models with RF and Bi-LSTM over the same timeframe. This approach offers significant cost savings, transparent portfolio management, and a trust-free platform for investors, paving the way for broader cryptocurrency adoption. Future work will focus on enhancing prediction accuracy and achieving greater decentralization.