Description
UNIVERSITY OF PORTSMOUTH
UOP BAAFM Intake 20
U31339 Financial Investment Project (FIP)
FIP Individual Assignment
Report Submission Date: 5 September 2023
Assignment Objectives
You are given a notional SGD 200,000 to invest on the Singapore and the UK stock markets in shares selected from the list of shares in the FTSE ST ALL Share Index (listed on the SGX), and FTSE 100 index (listed on the London Stock Exchange).
You need to build diversified investment portfolios and split your investment 50:50 between two portfolios of shares, which consists of at least 10 companies based on fundamental analysis. The aim is to maximise the returns of the investment and try to beat the market, e.g. achieving a greater return on average than the market return (FTSE ST ALL Share Index and FTSE 100 index) during the period of trading. It is important you can demonstrate that you understand why you invest in those companies and are able to justify your share selections. You need to compare and contrast the two portfolios and you need to make explicit reference to Efficient Market Hypothesis (EMH) in your analysis.
Assignment Requirements
▪ You are given a notional SGD 200,000 to invest in the Singapore and UK stock markets.
▪ You should demonstrate your understanding in equity investment and be able to explain why you buy and sell the selected shares. The market is represented by the FTSE ST ALL Share Index for the Singapore shares and FTSE 100 index for the UK shares – if you do not beat the markets, you will not lose marks. You must calculate the return on the two markets from your first trade to your last trade in order to determine whether you have beaten the markets or not.
▪ The shares MUST be listed on the FTSE ST ALL Share Index (listed on the SGX) and FTSE 100 index (listed on the LSE).
▪ Your investments should be based upon fundamental analysis only. You should use value investing to select your stocks.
▪ Each portfolio must contain at least 10 companies’ shares in this assignment.
▪ You need to build your portfolios and start trading from Monday, 1st May 2023. The entire capital of SGD 200,000 should be utilised by Monday, 8th May 2023. The end date of trading period is by Friday, 18th August 2023. So, you have 16 weeks to trade. This means that you are going to have to use short-term investment strategies.
▪ Your need to justify the purchase and sale of the individual shares, which should reflect the trading strategies/selection criteria used to build up your investment portfolios.
▪ As part of trading record, a monthly review on the portfolios’ performance is required and you should also document how your investment decisions might change based on the monthly review.
▪ You are allowed to trade as many times as you like, bearing in mind the transaction costs and stamp duties associated with each trade.
▪ Write a 4,000-word share trading report on the investments you make, which takes up 70% of the total mark of this module.
Submission Requirements
▪ Word Limit: 4,000 words excluding references, workings of calculations, appendices etc. We do not allow any extra margin in terms of the word counts.
▪ Full references and an appendix with record/evidence of your trades should be included.
▪ Referencing according to APA (6th edition) system is required. You must include all references that have been used in the writing of your work; these will be included in the section marked.
References at the end of your report.
▪ The assignment reports must be submitted online to Moodle. The filename must be in this format ‘FT20 FIP REPORT_UP student number’ for FT students, and PT20 FIP REPORT_UP student number’ for PT students. The submitted reports will automatically be put through Turnitin, so a separate submission to Turnitin shall not be necessary. You can check your work before final submission using the check point available on the Moodle page. Please note that the Turnitin match must not materially exceed 20%.
▪ Your report needs to be submitted by 23:55 on Tuesday 5th September 2023.
▪ This is an individual assignment.
▪ Your online submission must be in a single PDF document, and to contain the cover page with the UoP student number, declaration, similarity index page, the report and appendices.
Recommend Report Format
Introduction – i.e., A brief overview on the investments you made, the investment strategies (e.g. value investing) used in trading and summary of the trading performance for each portfolio.
Literature Review – This section should provide theoretical and empirical evidence to demonstrate your understanding of EMH and challenges to the theory (or Behavioural Finance views).
Method – i.e., How did you select the companies for your portfolios? You should explain the stock selection criteria, or the trading strategies used in setting up the portfolios. You need to justify your stock selection criteria/trading strategies, and this should be done by making direct references to the journal articles/books/business reports/news read.
Results – i.e., How did the portfolio(s) perform? Did the portfolio(s) outperform the market(s)? Which company performed particularly well or bad, and why? Try to link the trading results with the investment strategies used and the latest developments in the market, which would help to reflect on how you have been doing in your investments.
Conclusion – i.e., You could tie your results back to the literature you have read on the type of analysis you have used. Limitations on the trading strategies applied etc
Appendix – Spreadsheet of your trading record. This should include the company name, date of purchase/sell, number of shares bought/sold, share price, trading costs (i.e., transaction fee, stamp duty), profit and loss for each of the companies invested and final profit/loss for each of the two portfolios.
Presentation: Structure, clarity, use of grammar, correct spelling, referencing.
Transaction costs
When you purchase shares you must also pay Stamp Duty of 0.2% of the purchase price. There is no Stamp Duty payable when you sell your shares.
You should also assume that you buy your shares online through an internet broker. Assume that the broker charges you a flat fee of SGD10.00 per trade, i.e. SGD10.00 when you buy and SGD10.00 when you sell.
You can buy and sell in any amount you like. You do not have to buy in round amounts. For example, you could buy 798 shares or any other number you like.
Sources of Data
Obtain share prices and news from financial information sources like the SP Capital IQ Database andothers, including:
https://sginvestors.io/,
https://www.shareinvestor.com/sg
Readings
▪ Bulkowski, T. N. (2012), Fundamental Analysis and Position Trading: Evolution of a Trader, Wiley, chapters 2, 6, 8, 9, 10 and 12
▪ Ackert and Deaves (2010), Behavioural Finance: psychology, decision making and markets, especially pp. 63-65, 219-221 and chapter 19
▪ Siegel, J.J (2014) Stocks for the long run, McGrawHill, chapter 12
▪ Bird and Casavecchia (2007) ‘Sentiment and financial health indicators for value and growth stocks: The European experience’, European Journal of Finance, 769-793
▪ Fama & French (1998) ‘Value versus growth: the international evidence’, Journal of Finance, 1975-1999.
▪ La Porta, Lakonishok, Shleifer, Vishny (1997) ‘Good news for value stocks: further evidence on market efficiency’, Journal of Finance, 859-874.
▪ Lakonishok, Shleifer, Vishny (1994) ‘Contrarian investment, extrapolation and risk’, Journal of Finance, 1541-1578.
▪ Piotroski and So (2012) Identifying Expectation Errors in Value/Glamour strategies: A fundamental analysis, Review of Financial Studies
▪ Piotroski, J.D. (2000) Value investing: The use of historical financial statement information to separate winners from losers, Journal of Accounting Research, 38, 1-41
▪ Fama (1991) Efficient Capital Market: II. The Journal of Finance, Vol. 46, No.5 (Dec 1991), pp 1575-1617
▪ Jagadeesh & Titman (1993) Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency. The Journal of Finance, Vol. 48, No. 1, (Mar., 1993), pp. 65-91
▪ Dimson & Marsh (1998) Murphy’s Law and Market Anomalies. Working Paper. pp1-35
▪ De Bondt & Thaler (1985) Does the stock market overreact? The Journal of Finance, Vol 40, No 3.
(July 1985) pp793-805
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