Even in Emerging Markets, Technical Trading is Hazardous to Your Wealth

Alhashel, B. and Almudhaf, F. and “Even in Emerging Markets, Technical trading is Hazardous to your Wealth”, Emerging Markets Finance and Trade, Forthcoming

Posted: 24 Aug 2020

See all articles by Bader Alhashel

Bader Alhashel

Kuwait University

Fahad Almudhaf

Kuwait University - Department of Finance and Financial Institutions

Date Written: July 19, 2020

Abstract

This paper tests for the ability of a variety of technical indicators to generate excess returns at the individual stock level in the seven emerging and frontier markets of the Gulf region. While technical indicators show some early profitability promise, after controlling for the data snooping bias using the False Discovery Rate (FDR) methodology and non-synchronous trading, we fail to find any predictive ability or profitability for technical analysis. We arrive at a similar finding when assessing the risk-adjusted performance of a portfolio composed of stocks chosen based on technical indicators. The findings go to show the failure of technical analysis on the stock level. The findings are also evidence of the Gulf region markets being at least weak-form efficient and carry implications for investors choice of investment tools.

Keywords: Emerging Markets, Technical Analysis, Trading Rules, GCC, Transaction Costs, Market Efficiency, FDR

JEL Classification: C32, C52, G11, G12, G14, G15

Suggested Citation

Alhashel, Bader and Almudhaf, Fahad, Even in Emerging Markets, Technical Trading is Hazardous to Your Wealth (July 19, 2020). Alhashel, B. and Almudhaf, F. and “Even in Emerging Markets, Technical trading is Hazardous to your Wealth”, Emerging Markets Finance and Trade, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3655712

Bader Alhashel (Contact Author)

Kuwait University ( email )

College of Business Administration
Kuwait University
Shuwaikh, 5486
Kuwait

Fahad Almudhaf

Kuwait University - Department of Finance and Financial Institutions ( email )

Kuwait

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