Active versus Passive Investment Management Strategies: An Assessment of the Efficiency of the Capital Market in Zambia
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This study investigates the efficiency of the equity capital market at the Lusaka Securities Exchange Plc. (LuSE) in Zambia, focusing on the perceived degree of market efficiency and the influence of fundamental and technical analysis. Grounded in the Efficient Market Hypothesis (EMH), a communication-based approach and bivariate regression analysis were employed to assess these relationships. The results indicated that 59% of respondents viewed the capital markets as inefficient. Market efficiency exhibited a stronger negative correlation with technical analysis than with fundamental analysis, suggesting the presence of weak-form inefficiency. Technical analysis was found to account for more variability in market efficiency, implying limited predictive value of publicly available financial information. In response to these findings, the study recommends that the LuSE enhance the dissemination and timeliness of market-related information. Improving transparency and access to data may strengthen investor confidence and foster more efficient market conditions within Zambia’s emerging financial landscape.
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