An empirical review of the complimentary nature of fundamental and technical analysis techniques based on JSE-listed stocks

[摘要] This study contributes to the debate on whether fundamental analysis and technical analysistechniques can be used jointly in making investment decisions. Extant literature onfundamental and technical analysis techniques has frequently focused on analysing each ofthe valuation techniques independently of one another. In this study we construct a modelthat integrates both fundamental and technical analysis variables (hybrid model) todetermine whether the hybrid model can have a superior explanatory power to modelsbased on each of the valuation techniques in isolation. This study is based on all ordinaryshares that have been listed on the JSE main board between the 2002 and 2012 fiscal years.Testing rejects the complimentary nature of fundamental and technical analysis techniquesby showing that the technical analysis model has a superior explanatory power to both thehybrid model and the fundamental analysis model. We also demonstrate that JSE-listedstocks do not exhibit momentum or contrarian effects with respect to return performancesand that the fundamental analysis variables that play a significant role in explaining stockprice movements of JSE-listed stocks are the book value per share, cash flow per share,earnings per share and dividends per share.

[发布机构] University of the Witwatersrand