APPRAISING INVESTMENTS IN COMMON SHARES: THE CASE OF MALAYSIA

This paper is an attempt to provide some insight into the methods used by investment analysts in brokerage firms in the emerging capital market of Malaysia to appraise the value of ordinary shares before advising their clients. A postal questionnaire survey was conducted in 1996 to obtain the relevant research information from investment analysts representing all 58 brokerage houses in Malaysia. The empirical results indicate that although the principal technique used by Malaysian investment analysts is fundamental analysis (supplemented by technical analysis), a vast majority still practice the "gut feeling" technique and only provide brokerage services to their clients without employing analyst to conduct an analysis of the relevant information. For future research, the question of how the analysts' recommendations regarding a particular share are arrived at must be addressed.