FEATURE
PAPER
Market Perception
in Country Fund and Ishare Relationships
The
following paper was presented at the 2007 Allied Academies
International Conference - Jacksonville. It was written
by Rajarshi Aroskar of University of Wisconsin and
William Ogden of University of Wisconsin.
Abstract
This study
analyzes the market perceptions in the country fund and iShare
markets. It
investigates if there are fundamental relationships between
the two markets or if the relationships
are solely based on investor perceptions. iShares, which trade
in the US, mimic the MSCI (Morgan
Stanley Capital Index) for the respective country. Thus iShares
represent a broad index for that
country. Country funds, on the other hand, are actively managed
mutual funds investing in stocks
of a specific country. Thus, a country fund represents a subset
of stocks for a particular country. The
above would imply that iShares would affect country funds.
It is, however, possible that there is no
such fundamental relationship, only that market participants
perceive it. Fundamental relationships
are investigated using the net asset values (NAVs) of these
assets. On the other hand, market iShares and
country funds. The existence of price
relationships in the absence of NAV relationships, may lead
us to believe that market perceptions
are at work, rather than fundamental relationships.
Country
funds from three European (Germany, Spain and Switzerland)
and three Asian
(Japan, Malaysia, Singapore) countries are used to investigate
such relationships. Results show
that in European NAVs there are no relationships from iShares
to country funds. However, we do
find relationships in prices from iShares to country funds.
On the other hand, in Asia relationships
are found from the Japanese iShare NAV to all Asian country
fund NAVs. Also, all country iShares
together affect all Asian country funds. Such relationships
are also found in the prices.
These results
indicate the possibility that investors perceive an effect
from iShares to country
funds in Europe. However, in Asia, relationships may have
a more fundamental basis.
From a
diversification standpoint, these results have implications
for investors. Regardless
of whether the relationships are fundamental or as a
result of market perception, investors may not
be able to effectively diversify.
Read
the Entire Paper...
TIP
OF THE WEEK
E-Tailing
The number of people around the world who own computers is
even increasing, and computer usage is at an all-time high.
It is therefore not surprising that their use as a purchasing
tool generates sales at record levels. Internet service providers,
which allow computer users to access the web, understand the
importance of Web sites in terms of consumer purchasing, and
they wage intensive multimedia advertising campaigns to attract
computer users to sign up for their services.
On-line
consumers spending reached $74 billion in 2002. An important
figure in terms of Internet shopping is that
men are responsible for 49 percent of the
purchases, a significantly large percentage than those who shop in the brick-and-mortar
operations. This gives the off-site retailers reason to use the Internet as
a means of attracting men who would not be likely to visit
their stores. The consulting
company, comScore, reported that the consumer who often shopped on price-comparison
sites was the 35-to-44 year-old male with minimum income of $60,000. There
was also a reported increase in Internet use by minority
shoppers, another segment
fashion merchandisers want to reach.
Fashion
apparel and accessories merchandisers also are beginning
to emerge as one of the more important segments for electronic
retailing, or E-tailing,
as
it is more commonly called. As reported by comScore, these product classifications
are now the seventh fastest-growing nontravel E-commerce category.
The introduction of this purchasing channel has created a new language used
by consumers and vendors alike. Internet users now readily speak in terms
of search
engines, dot-coms, Web sites, and high-speed access.
Creating a Web Site
When users connect to Web sites on the Internet, they are greeted
by a wealth of different screens. Those sites that deal specifically
with merchandise for sale run the gamut form travel to products
for the home. Much as advertisements in print and broadcast
media employ different styles and formats, the same is true
for E-tailer Web sites.
The difference
in the designs are based upon factors such as the costs associated
with the site creation, the
number of different screens needed to show the
product line, and whether or not it will include an interactive component. Design
Development
The nature
of the design depends upon the size of the company, its merchandise
assortment, and the amount of money available
for the site development. Companies
with limited resources can use standard Web site templates in which they merely
insert their own products and price. For a nominal fee, Web site design companies
offer these models and help companies prepare them and launch them from on
the Internet. Costs associated with this type of site include monthly fees
to the Internet service provider as well as the initial startup expense.
`To distinguish themselves from their competitors the majority of E-tail Web
sites are created by the experts who tailor their designs to meet the merchant’s
exact requirements.
Web
Site Specifications
When users
log onto a search engine and enter in such keywords as E-tailers,
on line retailers, or retail web sites, they
are quickly offered a vast list
of sites to choose form that reveal a host of two long and are no more than
advertisements that feature a brick- and- mortar operation and the address
of its outlets. Some sites are more complex and offer a number of pages that
tell about the company, its products and services, locations of venues, and
some items that may be bought on-line.
At the other end of the spectrum are sites that feature a multitude of the
pages. These are generally the Web sites of the major department stores that
engage in multichannel retailing to reach as many prospective customers as
possible, chain organizations that also merchandise their goods via multichannel
marketing, and Website-only companies that use the Internet as their only
means of selling to the consumer.
Web site-only
merchants are constantly changing their sites in terms of
size, scope, appearance, and product offerings,
much as the brick-and-mortar merchants
refine their in-store premises. They offer timeliness to their E-commerce
outlets and give the impression to their targeted audiences that they are
always seeking
ways to better serve them. They maximize
their Web site effectiveness by either employing in house
designers who work exclusively for the company
or use outside specialist
who are on
retainer to make the necessary changes and upgrades the merchants deem
appropriate.
Second
Edition Fashion Retailing.
By: Ellen Diamond. Pgs.30-31
Published 2006
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