ACADEMIC SESSION 1 (2022/2023)

GA20003 MONEY AND CAPITAL MARKET

INDIVIDUAL PROJECT: CASE STUDY

NAME MATRIX H/P NO.

NO.
MUHAMMAD NABIL FARHAN BG21110318 0126891519
BIN AZMUDIN
Critical Review: Investor Decision Invest In Stocks Based On Perceptions Of The
Stock Market Affected By The External Investment Environment Factors.

This article examines how the external investment environment affects investors'
opinions on the stock market and how stock market perceptions affect equity investing
(Khan et al., 2021) This is therefore also the object of what will be discussed later.
Additionally, this review will address three variables: investment climate, stock market
outlook, and equity investing. According to (Vanags & Butane, 2013), creating a
sustainable investment climate has become an increasingly important component of
national strategic development plans around the world. Therefore, in this study, investment
environment factors such as stock market performance; Neighborhood influences, political
concerns, government policy and the economy Indicators (Khan et al., 2021) influence
stock market perceptions about it A stock market perception can be defined as the
integration of the following perceptions: stock market investor. Investors analyze
information in a variety of ways, depending on your personal perspective and information
processing skills, as well as the financial instruments they want to trade (Liebmann et al.,
2016) Therefore, one of the challenges identified by (Khan et al., 2021) is this. Economic
uncertainty affects the financial health of investors. Tendency to withdraw from the market
In this review article, the most important aspect of the external investment climate
concerns political issues, especially for emerging countries. According to (Günay, 2016),
political risk has a large impact on stock market returns and is more important in developing
economies than in advanced economies. At the same time, the authors find that political
risk has increased in mature countries relative to emerging countries over the past decade
Investors considering entering developing economies are therefore aware of the danger of
instability caused by changes in government and the resulting changes in international and
domestic relations policies. Based on a survey of the political risk assessment process of 22
Malaysian international companies, the authors found that most multinationals prefer a
"good citizenship policy" as a strategy to avoid political risk Research results from (Khan
et al., 2021) show that when political climate changes are consistent with the statements
above, investors will adjust their stock market judgments based on their personal investment
strategies and portfolio investments.
The performance of the stock market is also an important factor in investors'
decision-making, and it is another external factor of the investment environment that will
change the perception that investors have of the stock market. In their study (Cook et al.,
2006), they used holding period returns from date of issue to at least 36 months instead of
earnings per share to quantify organizational success. The author also said that a good stock
market performance will encourage investors to invest Investors have always had a positive
view of the short term, thereby reducing risk and enhancing future returns. Investors choose
to hold short-term securities because of past stock performance (Khan et al., 2021)
Government policies have a big impact About stock prices and investor opinions on
the stock market Company higher if they can receive economic benefits from the
government This is an achievement that improves profitability. Investment incentives for
investors (Belo et al., 2013) According to Ferguson and Lam (2016) Equity return volatility
is positively correlated The news-based sentiment quotient increases in volatility in the
following moments. Intensive national debate. Bello et al (2013) documenting the same
claim. Take the US presidential election as an example. profitable company. In this case,
government policy faces large fluctuations in profitability. Government policy is uncertain
even if companies need to make more profit stock returns; conversely, if government policy
is less uncertain. Even with lower returns, companies will take less risk. The authors also
showed that stocks with less government exposure generate returns They perform much
better than companies with a lot of government involvement According to Khan et al (2021)
show that investors are more willing to invest than states. Political risk is mitigated.
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