South African Market Research Articles

Efekat dana u nedelji na južnoafričkom tržištu akcija - a garch analysis

Understanding dynamics of daily stock returns provide insight in trading opportunities available in stock markets. The purpose of the study was to examine whether day of the week effect exists in the South African equity market. Daily data from Top 40, All Shares, Basic Materials, Industrials, Consumer Goods, Health Care, Consumer Services, Telecommunications, Financials and Technology indices were collected for period 1995 to 2018. Exponential and threshold generalized auto regressive conditional heteroskedasticity models were employed to analyse day of the week anomaly. Findings of the day of the week for the mean equation revealed a positive Monday effect for aggregate indices namely Top 40 and All shares whilst the sectorial analysis showed a positive Monday effect for Basic materials, Consumer goods, Health care and Telecommunication. Furthermore, the mean equation for day of the week depicted a positive Tuesday effect for Financials sector, positive Wednesday effect for Consumer services sector and Thursday effect for Industrials and Technology sectors. The variance equation highlighted negative Monday effect for Top 40 and All shares as well as Basic materials, Consumer goods, Health care, Consumer services, Telecommunication and Financials sectors. However, Industrials sector indicated a negative Friday effect. The existence of day of the week effect nullifies the efficient market hypothesis in its weak form. In practice, it is recommended that for Mondays investors should invest in Top 40 and All shares, for Tuesday and Wednesday it would be prudent for investors to invest in Financial and Consumer services sectors respectively. Returns for Thursdays are attractive to an investor investing in the Industrial sector. An investor can reduce exposure by diversifying in the Health sector on Monday and in the by Industrial sector on Friday. Unlike previous studies that focussed on aggregate market indices, this study extended the analysis to sectors that constitute the market index.

Stochastic Default Risk Estimation: Evidence from the South African Financial Market

Stochastic Default Risk Estimation: Evidence from the South African Financial Market

The risk-return relationship in South Africa: tail optimization of the GARCH-M approach

<abstract> <p>The risk-return relationship is of fundamental significance in the field of economics and finance. It is used to structure investment strategies, allocate resources, as well as assist in the construction of policy and regulatory frameworks. The accurate forecast of the risk-return relationship ensures sound financial decisions, whereas an inaccurate one can underestimate risk and thus lead to losses. The GARCH-M approach is one of the foremost models used in South African literature to investigate the risk-return relationship. This study made a novel and significant contribution, on a local and international level, as it was the first study to investigate GARCH-M type models with different innovation distributions. This study analyzed the JSE ALSI returns of the South African market for the sample period from 05 October 2004 to 05 October 2021. Results revealed that the EGARCH (1, 1)-M with the Skewed Student-t distribution (Skew-t) is optimal relative to the standard GARCH, APARCH and GJR. However, the EGARCH-M Skew-t failed to capture the financial data's asymmetric, volatile and random nature. To improve forecast accuracy, this study applied different nonnormal innovation distributions: the Pearson Type Ⅳ distribution (PIVD), Generalized Extreme Value distribution (GEVD), Generalized Pareto distribution (GPD) and Stable. Model diagnostics revealed that the nonnormal innovation distributions adequately captured asymmetry. The Value at Risk and backtesting procedure found that the PIVD, followed by Stable, outperformed the Extreme Value Theory distributions (GEVD and GPD). Thus, investors, risk managers and policymakers would opt to use the EGARCH-M in combination with the PIVD when modelling the risk-return relationship. The main contribution of this study was to confirm that applying GARCH type models with the conventional and normal type distributions, to a volatile emerging market, is considered ineffective. Therefore, this study recommended the exploration of other innovation distributions, that were not included in the scope of this study, for future research purposes.</p> </abstract>

Digital Trends and Tools Driving Change in Marketing Free State Tourism Destinations: A Stakeholder’s Perspective

This study sought to determine the key digital trends and tools driving change in tourism destinations from the perspectives of South African marketers, specifically, those in the Free State province. Based on semi-structured interviews conducted with tourism destination marketers, the findings highlight key digital trends and tools causing disruptions and crucial shifts in tourism marketing. The results confirm that, although at a slow pace, Free State tourism destination marketers have embraced digital transformation and that the accelerated growth in digital technologies has reshaped the marketing processes of tourism destinations. The study contributes to the existing literature on digital marketing, which needs to be constantly updated, due to the changes in the trends, to improve the visitor experience. The study has implications for businesses, destinations, and policymakers in identifying key considerations for sustainable technology use, creating an enabling environment for digital adoption and transformation.

Servicification of Manufacturing in Global Value Chains: Upgrading of Local Suppliers of Embedded Services in the South African Market for Wind Turbines

While services are an essential element in the global production, trade and consumption of manufactured goods, limited research has been conducted on the role of services in studies of global value chains (GVCs). Recently, however, an emerging literature on the ‘servicification’ of manufacturing in GVCs has evolved, most of which involves aggregate-level analyses of countries and sectors based on trade statistics. Previous studies have thus failed to explore whether and how local firms in developing countries may capture value and upgrade through their insertion into GVCs as service suppliers. In this paper, we contribute to the literature by analysing the development of an industry supplying wind-turbine services in South Africa. We draw on in-depth fieldwork, including fifty-two interviews and five case studies of firms operating as suppliers of various types of ‘embedded’ services to wind-power projects constructed in South Africa. We show the significant economic value in terms of the employment thereby created and the upgrading pathways of five local service-suppliers in knowledge-intensive and high value-added service activities. Our findings point to the benefit of devoting attention to the role of services in relation to upgrading in GVCs.

Generation Y students' purchase behaviour towards organic foods in South Africa

Objective - The primary objective of this study is to identify and explain the antecedents of organic food purchase behaviour of Generation Y students in the South African context. This study aimed to shed some light on Generation Ystudents' health consciousness, perceived behaviour control, convenience, attitudes, purchase intentions, and actual buying behaviourtoward organic food products. The study also attempted to determine the underlying strengths and relationships between the constructs used in the measurement scale. Lastly, gender relationships were investigated to determine if any differences existed between males and females in terms of their organic food product purchases. Methodology/Technique - This research study employed a descriptive, non-probability, convenience sampling design. The intended target population was full-time registered undergraduate Generation Y students aged between 18 and 24 years. The sample size was 200 students based across the four faculties within the chosen higher education institution, namely the Faculty of Management Sciences, the Faculty of Applied and Computer Sciences, the Faculty of Engineering, and the Faculty of Human Sciences. The 200 self-administered questionnaires were distributed during recess times as to not to disrupt any learning time. The questionnaire contained a cover letter explaining the purpose of the study and that participation in the study was completely voluntary. Findings - The measurement scale displayed adequate reliability and validity for all constructs. Furthermore, all constructs had statistically significant positive means, indicating that Generation Y students are health-conscious, care for the opinions of friends and family, display pro-organic attitudes, intentions, and behaviour. Results from this study indicate that there is a need for food organizations to consider implementing organic-based products in their product offerings within the South African market. Novelty - Investigation oforganic food product purchase behaviouramong South African Generation Y students (Consumer behaviour). Type of Paper - Empirical Keywords: Organic Foods; Purchase Behaviour; Generation Y, South Africa. JEL Classification: M31, M39.

The structure of the South African stock market network during COVID-19 hard lockdown

This study investigates the topology of the South African stock market network pre, during, and post the level 5-lockdown period. We use the daily closing price of the 134 companies in the all-share index (ALSI) from 01 October 2019 to 30 October 2020. We construct the minimum spanning tree using the cross-correlation of the returns computed from the closing price data. The research findings show that the South African stock market network forms clusters and is homogeneous, and the finance industry plays a central role. Specifically, the results show an expansion of MST during the level 5 lockdown and shrinkage of the MST post level 5 lockdown. The average correlation coefficient decreases through all sub-periods; conversely, the average distance increases in all sub-periods. Post-level 5 lockdown period, stocks in the Health Care Equipment & Services sector form a small cluster that did not exist before the lockdown period. JSE node degree distribution for all sub-periods follows the power law.

An Analysis of Underemployment among Young Graduates: The Case of a Higher Education Institution in South Africa

Labour markets have undergone vast transformations over the last few years. There are arguments that employment and unemployment measures have not been adequate in understanding the complexities of labour markets. Research on labour underutilisation has focused on one side of the spectrum, which is just about the scarcity of jobs. However, there is more to the labour market than just scarcity of jobs, and many researchers believe unemployment is not a complete measurement of unused labour capacity, which is why this study aimed to investigate the existence of underemployment from the perceptions of young graduates themselves. In this regard, the definition of young people entailed those younger than 35 years as officially defined in South Africa. The study employed a primary data method of data collection in which an online survey was used to collect the necessary data from the alumni database of a South African university. The study used binary logistic regression to determine factors that contributed to or influenced underemployment status. The main findings indicated that underemployment was rife according to age, where younger graduates (20–29 years) were more likely to be underemployed compared to their more mature counterparts; that is, those in the 30–34 age category, with non-White graduates most likely to encounter underemployment compared to their counterparts. This study resulted in important findings that carry significant policy implications and recommendations that may be crucial in correcting the current employment mismatches in the South African graduate labour market.

Examining the luxury apparel behavioural intentions of middle‐class consumers: The case of the South African market

AbstractThe study aims to offer an understanding of luxury apparel behavioural intention amongst middle‐class consumers in emerging markets. There is a lack of understanding of luxury apparel behavioural intention amongst the middle class in emerging markets, leading to luxury apparel marketers developing irrelevant marketing strategies. Consequently, this study uses the theory of planned behaviour by incorporating additional luxury‐context antecedents and including collectivistic constructs and income levels as moderators to understand luxury apparel behavioural intention amongst the middle class in South Africa. As South Africa is the preferred market for luxury apparel retailers when targeting Africa, the South African middle class was deemed an important group to understand. Through the online questionnaire, 629 responses were obtained. Covariance‐based structural equation modelling and moderation analysis were used to assess the proposed relationships. The results show that the impact of luxury‐context antecedents ‐ fashion involvement, materialism‐success, brand consciousness, status consumption ‐ provide a deeper understanding to how consumers in emerging markets differ in their consumption of luxury apparel. The moderating role of collectivism reveals that middle‐class consumers in emerging markets are concerned with conforming and face‐saving when purchasing luxury apparel. In addition, the moderating role of income levels reveals that middle‐class consumers with lower income are more influenced by their social groups compared to those with higher income, which suggests that lower‐income groups are more aspirational and seek acceptance. Further insights are provided regarding the moderating role of collectivism and income levels on behavioural intention.

Self-perceived employability among undergraduate students at a South African university

Orientation: South Africa has been suffering from persistently high levels of unemployment since 2008. The youth is regarded as the most at-risk group in the South African labour market and unemployment amongst the youth is considered one of the most critical socio-economic problems in South Africa. Increasing one’s employability is essential to securing employment and enhancing one’s well-being.Research purpose: This study aimed to explore the self-perceived employability of undergraduate students at a South African university.Motivation for the study: Currently, there is a scarcity of published research on the self-perceived employability amongst undergraduate students at higher education institutions in South Africa.Research approach/design and method: The study was conducted within a positivistic research paradigm. A quantitative-based cross-sectional survey design was used. Convenience sampling was used to select the students who were included in the survey. Data were collected through a web-based survey, using a standardised coded questionnaire that consisted of a five-point Likert-type scale.Main findings: The results indicated that the respondents were relatively confident about their internal employability, but they were less confident about their opportunities in the external labour market.Practical/managerial implications: Understanding one’s employability and the accompanied issues creates awareness of one’s potential, skills and knowledge to become a successful citizen and employee.Contribution/value-add: The study shed light on the self-perceived employability of undergraduate students at a South African university and consequently contributes to the existing literature on employability in the South African context.

Moving from a bad to a good pricing regime: The South African private health care market

AbstractThe South African private health care market combines a highly concentrated demand side with expensive medical services. This combination suggests that medical insurance schemes are not using their full market power. To explain this puzzle, we construct a delegated bargaining model in which agency costs give rise to two different pricing regimes. In the ‘good’ pricing regime, the scheme incentivises its administrator towards aggressive bargaining behaviour with health care providers. The ‘bad’ pricing regime results when the scheme decides against such incentivation. Policy measures that push the number of providers above some critical threshold can force a change from the ‘bad’ to the ‘good’ pricing regime.

Exclusion of South African Rural Communities from Digital Communication Podia: A Regulatory Conundrum

This article reports on a study that examined how SA Connect (i.e., the South African broadband policy that was approved in 2013) has sought to integrate rural South Africans into the digital communication podia. The study drew from a major recent study focusing on selected themes as captured in SA Connect. Furthermore, it interrogated the current configurations of the South African telecommunications market and the role of the Independent Communications Authority of South Africa (ICASA) in levelling the playing field within the sector. Located within the terrain of telecommunications policy and regulation, the study interrogated the interplay between mobile operators and ICASA in expediting broadband penetration into rural South Africa. Theoretically, the study was guided by the tenets of the knowledge gap theory as proposed by Philip Tichenor, George Donohue and Clarice Olien in 1970 and the principles of universal access within the context of the broadband ecosystem. The findings showed that an unreconstructed and predisposed skewed urban market as well as the indecisive regulator stance led to failure to reduce the digital divide. Thus, despite relentless attempts to address these challenges at policy level, South African rural areas remain excluded from the digital communication podia, subsequently causing digital inequality. The findings confirmed critical perspectives on digital inclusion which maintain that, the more information is circulated through the new conduits of information technology, the more communities from the low economic stratum of society are excluded from the information society and participation in the digital economy.

Turn-of-the-month effect, FX influence, and efficient market hypothesis: new perspectives from the Johannesburg stock exchange

ABSTRACT This paper examines the Turn of the Month (TOM) effect in the highly capitalized emerging South African stock market. We use data from the FTSE/JSE Afr8ica All Shares Index (JALSH) and the USDZAR FX market for the period 31.12.1998-31.12.201. We provide empirical evidence that TOM is present in the S. African stock market, but there is a non-TOM anomaly in the FX market. Thus, the S. African stock market enables us to gain new perspectives on the study of the TOM effect. Specifically, using an optimization algorithm, we are able to identify the optimal intra-month period in the JALSH by examining it in both the local currency (ZAR) and in USD. Moreover, we show that the performance in the USDZAR FX market has an impact: (a) on the domestic stock market’s performance (JALSH in ZAR), and (b) on the TOM effect. Finally, we present some practical investment strategies based on the TOM effect which can outperform the stock market and prove beneficial for investors trading in USD.

Isolation, Characterization and Quantitation of Photoactive phases of Titanium (IV) oxide in skin-lightening products

Titanium (IV) oxide (TiO2) is used as a physical blocker of ultraviolet (UV) radiation in many skin-care products. Absorption of TiO2 through the skin is likely to interact with viable tissues because UV radiation absorption generates toxic reactive oxygen species such as hydroxyl radicals. Studies on the acute toxicity of TiO2 nanoparticles in mammals indicate that intra-tracheal instillation, intraperitoneal injection or oral instillation of TiO2 particles to the animals evoke an inflammatory response as well as certain histopathological changes. Ultrafine particles of the anatase form of titanium (IV) oxide, which are smaller than 0.1 microns, are pathogenic. In this work eight skin-lighteners containing TiO2 from South African market were studied. The TiO2 was extracted by a fusion technique and quantified by inductively coupled plasma-optical emission spectrometry (ICP-OES). Sequential solvent extraction was employed to isolate TiO2 particles for characterization employing high-resolution transmission electron microscopy (HR-TEM) and powder X-ray diffraction (PXRD). All samples considered in this study meet agreeable TiO2 % (m/m) levels as specified by all health regulatory bodies. Both forms of TiO2: anatase and rutile, were found to be present. Most samples contained nano-TiO2 in the particle size range of 16.23 nm to 51.47 nm that could lead to detrimental effects. The fact that the anatase form, known for its photocatalytic activity, was present, is a cause for concern.

Socio-Economic Barriers to Adoption of Electric Vehicles in South Africa: Case Study of the Gauteng Province

Electric vehicles (EVs) were introduced into the South African market in 2013, and their adoption rate has been very low. There are limited existing studies covering consumer perceptions towards EVs in Africa and, thus, this study investigated possible socio-economic barriers present in the South African automotive market that impede the adoption or consumer purchase intention of EVs. The survey was conducted in the Gauteng Province in South Africa using questionnaires comprised of Likert-type questions. The analysis was conducted using statistical methods comprising mainly of frequency tables and Chi-squared tests on contingency tables. The findings of the study on barriers to adoption of EVs in the market highlighted the high purchase price, high battery price, and high likelihood for owning a secondary vehicle based on the current circumstances as the main purchase intention barriers that the respondents in the Gauteng Province accentuated. However, generally the willingness to buy EVs was high for a majority of the factors that were presented. With these perceived positive opinions from respondents, it is down to government and private companies to provide a conducive environment for the consumers.

AN ANALYSIS OF ASPECTS OF THE PROPOSED REFORM OF THE FINANCIAL CONSUMER COMPLAINT RESOLUTION MECHANISMS IN THE SOUTH AFRICAN BANKING SECTOR

One objective of the revised South African market conduct regulatory framework for the financial sector is to introduce an effective dispute resolution framework. The Financial Sector Regulation Act, and the Act to follow the Draft Conduct of Financial Institutions Bill, potentially address some of the deficiencies associated with the old dispute resolution framework. This article makes a distinction between the old and new regulatory provisions concerning internal dispute resolution and external dispute resolution structures in the banking sector. This research highlights the changes involved in the new regulatory framework and identifies which aspects of the amended regulatory framework aim to address a particular issue associated with the old dispute resolution framework. It is not argued whether this legislation will achieve the fair treatment and protection of financial customers in the banking sector, as only time will tell. However, it is acknowledged that the new structure will improve consistency and efficacy in this dispute resolution structure.

A Comparative Analysis of Weak and Semi-Strong Form Efficiency of Nigerian and South African Foreign Exchange Market

Foreign exchange market is said to be efficient if all available information are reflected in its exchange rates. An efficient foreign exchange translates to absence of profitable and exploitable trends which means that it is impossible for market participants or private agents to outperform the market. This study investigated the weak and semi-strong form efficiency of Nigerian and South African foreign exchange market to determine the significance of past exchange rates in predicting the present rate which is the test of weak form efficiency and it examined the co-integration relationships between selected pairs of exchange rate to determine the semi-strong efficiency. The secondary data used in this study were sourced mainly from the Central Bank of Nigeria Statistical Bulletin, the South African Reserve Bank Bulletin and the oanda exchange rate websites. The data used were the inter-bank spot exchange rates of Naira and Rand to Swiss Franc, Euro, Pounds, Dollar and Yen for the period of January 2010 to December 2017. The Augmented Dickey Fuller (ADF) test and the Phillip Peron (PP) test were employed to determine the weak form efficiency while the Variance Decomposition, Granger Causality and Co-integration tests were used to determine the semi-strong form efficiency of both countries. The results of the study revealed that the Nigerian foreign exchange market is efficient in the weak and semi-strong form at 5% level of significance while the weak form efficiency of South African foreign exchange market revealed mixed results. The market is efficient in the weak form except for the case of Rand to Dollar and Rand to Yen which showed inefficiency. The market is equally efficient in semi-strong form. The study concluded that market participants cannot make exploitable profits by trading in both markets because all past and publicly available information are already incorporated in the prices of exchange rates. It was therefore recommended that the inter-bank market in both countries should be well monitored and managed by the regulatory authorities so as to promote the effective and efficient smooth functioning of the foreign exchange market as well as achieving a stable and realistic exchange rates.

Will mandatory audit firm rotation reduce audit market concentration in South Africa?

Purpose: Deconcentrating the audit market was one of the stated objectives of the proposed mandatory audit firm rotation (MAFR) ruling in South Africa. With MAFR being a contentious topic, this study aimed to explore the possible effect of MAFR on audit market concentration in South Africa in anticipation of the implementation thereof in 2023.Design/methodology/approach: A sample of 415 South African listed companies was studied for the period 2010–2018. Data were mainly captured from annual reports. Descriptive statistics and significance testing were performed on calculated concentration ratios and identified audit firm rotations.Findings/results: South African audit market concentration mirrored empirical evidence from most developed countries – with Big 4 audit firms dominating the audit market, whilst a monopoly within the Big 4 audit firm grouping was also evident. Based on observed audit firm concentration and audit firm rotation behaviour, it was anticipated that MAFR might further increase audit market concentration. A concerning result was the sheer scale of audit firm rotations to be carried out in anticipation of MAFR in 2023.Practical implications: This study identified the impairment of audit quality and increased costs as possible unintended consequences of MAFR in South Africa.Originality/value: This study contributed to the limited body of knowledge on the possible effect of MAFR in South Africa. This study proposed alternatives to MAFR and recommended areas for future research to support evidence-based decisions on remedies to address audit quality and audit market concentration in South Africa.

An assessment of heavy metal contaminants related to cannabis-based products in the South African market

South African cannabis based products that were submitted to a private laboratory for the determination of heavy metal residues, were analysed. Two USP 232/ICH Q3D (United States Pharmacopoeia (USP), 2016; Elder and Teasdale, 2014) [2] specifications were considered for both oral as well as inhalation limits. The presence of each heavy metal residue was also determined in order to establish which residues are most prevalent in samples. To date, no data of this kind exist in South Africa specifically relating to cannabis based medicinal, recreational, or complementary products. A total of 310 samples were analysed in duplicate and are reported in an anonymized format. The submitted samples were divided into different category classifications and grouped according to relevance for oral or inhalation specification. The results showed an alarming 15% sample failure rate compared to the oral specification limit and a 44% failure rate compared to the inhalation specification limit. It is of the utmost importance for manufacturers to have the appropriate quality control regimes in place, especially for heavy metal residues, in South Africa. Furthermore, it is imperative to ensure regulation is enforced and the South African public is educated about the risks associated with using these products.

South African bonds as an alternative diversification asset for developed bond markets

Orientation: Globalisation of financial markets has made it progressively more difficult for effective diversification to exist, and as a result portfolio managers are in need of alternative diversification opportunities.Research purpose: Developed financial markets are more likely to be integrated with one another, and better diversification opportunities may be found in emerging markets.Research motivation: Limited research focuses on bond market diversification, and most research does not include South Africa as a diversification destination. This research examines whether developed bond market investors could use South African bonds to diversify their portfolios.Research design, approach and method: This article follows a quantitative research design with a causal-comparative or quasi-experimental approach. The econometric method used was primarily co-integration analysis establishing whether diversification opportunities exist between the South African bond market and five developed bond markets.Main findings: Overall, the findings showed that there was no co-integrating relationship between the South African bond market and developed bond markets, indicating that diversification may be possible in the long term. Furthermore, it was found that the South African bonds were less affected by short-term shocks compared with the developed market bonds.Practical/managerial implications: The results of this study indicated that South African bonds can be used to diversify a developed bond market investors portfolio. Developed bond market traders and fund managers should therefore consider holding South African bonds as a means of reducing their portfolio’s overall risk.Contribution/value-add: Holding South African bonds can be used to preserve a portfolio’s long-term wealth. Additionally, the resistance of South African bonds to short-run shocks also provides investors with a cushion against sudden and unexpected crises.