WHETHER CONSUMER SATISFACTION BENEFITS the INVESTMENT PORTFOLIO : EMPIRICAL EVIDENCE from HONG KONG

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

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Original languageEnglish
Journal / PublicationSingapore Economic Review
Online published2 Apr 2019
Publication statusOnline published - 2 Apr 2019

Abstract

This paper aims to investigate the role of a consumer satisfaction index (CSI) for financial investments in the Hong Kong market. Using yearly data for Hong Kong consumer satisfaction index (HKCSI) to compile a CSI at company level, the effect of consumer satisfaction on company market value is identified. A hypothesized investment portfolio based only on CSI at company level is created, and its return compares with a widely used index measuring stock market performance in Hong Kong. A formal statistical test on the outperformance of portfolios that load on consumer satisfaction is conducted. Using the Capital Asset Pricing Model (CAPM), the beta risk of the entire time period is evaluated, and shows that the portfolio risk based on company level CSI is not significantly different than the market risk. This paper concludes therefore that consumer satisfaction can be incorporated into financial models and applied for formulating investment portfolios with better performance than the market rate in Hong Kong.

Research Area(s)

  • Capital Asset Pricing Model, Company performance, consumer satisfaction, Hong Kong, investment portfolio, linear regression, portfolio optimization