Things That Investor Need To Know Before Invest

Published Date: 02 Nov 2017

This research paper is conducted to figure out the factors which determine an investor has good performance in China’s financial market. First of all, there are four determinants pointed out for this research topic as those determinants will be further explored and as independent variables in this paper. The four independent variables mentioned in this whole research paper will be investment online platform, knowledge management, market considerations and investor’s behavior. The reason of choosing China’s financial market as it is now an emerging market and growing rapidly. Furthermore, China’s financial market is getting massive interest from institutional investors internationally besides United States financial market.

There are two domestic stock exchanges in China which are Shanghai Stock Exchange and Shenzhen Stock Exchange. Currently, these two stock markets are still not efficient in allocating their resources and insider trading inhibits the growth of stock exchanges in long term. Besides that, there are some financial crises need to be watch out such as Non-performing Loan (NPL’s) happening in China’s domestic banking system, asset bubbles in the real estate, "twin crisis" (which are foreign exchange and banking or stock market). In addition, foreign investors also have to know the rules and regulation set by China’s government to avoid involve in illegal trading (Franklin Allen,

Jun"QJ"Qian, Meijun Qian, 2007).

1.2 Things that investor need to know before invest.

First, before an investor starts his or her journey to invest in China market, they need to master the skills of information technology as this skills can help them to master whatever information they in to search in China. According to Harleen Dang (2006), IEFA (Internet Economy Framework for Asia) is created to do more research on the how development of digital world influence the economy. As digital world growing bigger and bigger, investors easily can get in touch with the information such as politics issues, economic condition, global issues which change rapidly. Besides that IEFA framework found out that the spread of digital content and new technology applicants are stimulates the business opportunities, growth and employment rates.

Money is not the only tool investor need to use for their investment portfolio, a successful investor need to have sufficient and updated knowledge and information about the whole financial market works. Those investors who are lack of knowledge will have wrong concept that stocks, bonds and real estate are the only choices for them to put in money for investment. However, the financial market is not about these few components and there are still many choices for investor which are depend on which kind of risk taker they are. According to Harry M.Kat (2006), commodity futures sometimes will diversify the existing risk for typical investment portfolio where this financial instrument is always left out from the investor’s portfolio. Commodity futures are such as gold, silver, metal and energy which are uncorrelated with stocks and bonds; means if an investor’s portfolio has investment in equity market and commodity futures, the risk of investment from equity market will be diversify with commodity futures. Hence, investors have to know the potential financial instrument in the market and how those instrument function to make sure they can perform well in their portfolio. However, this does not mean commodity future is the only one financial instrument which can diversify investor’s investment portfolio.

Besides sufficient knowledge an investor need to have, an investor also need to know how is other investors behavior in the financial market as this is another component which manipulate the flow of financial market. According to the study from the author Richard Fairchild (2007), the psychological bias from investors might affect their decision-making on the financial markets, this is why nowadays behavioral corporate finance becoming so important in the financial market. As an example, the market value of stock or other financial instruments are following the new information occurs in the market, hence investor’s earning is manipulated by the risk of new information in the financial market. There is some of the possible investor’s behavior which might influence the decision-making of investors such as overconfident and conservative which this kind of belief comes from the market condition.

1.3 Rules and Regulations for Investing In China

First at all, before investing investors especially those who are outside from China should know the rules and regulations determined by the China national and local state government. According to Donald C. Clarke (2007), in the year 1990s, China national government already have their own complete set of rules and regulation for the business activities, bankruptcy, financial securities, trading transaction and so on. Tied rules and regulation do not mean the country are not available for investment, but it means this country have stable economic condition. Rules and regulations can guarantee investor’s rights and feel secured when they invest, such as those property’s investor’s rights is protected and predicted which investors will feel safe and do not worry about those properties they invest in China might be abused especially those foreign investors who are outside from China. If a particular country which do not have completed rules and regulation which can provide maximization protection to investors, the country might not have enough efficient and liquidity market which might lose interest from investors in long run.

Besides that, if an investor or a foreign firm wants to invest in China, especially for Foreign Direct Investment (FDI), it is suggested to be self-financing due to the inefficient of banking sector in China. Self-financing might include raising capital from local governments, investors, communities, retained earnings from the firms and all other funds raised by the firm. Even, the banking sector in China is not efficient, yet their state government is started open up their market economy from closed-economy which the state government welcoming foreign direct investment by allocating more than 10% of the state funds to the companies (Franklin Allen, Jun"QJ"Qian, Meijun Qian, 2007)

1.4 Problem Statement

There is always a question why many investors fail in China and what is the factors which drive them to succeed or fail in China financial market. It is believed China has greater financial market and is going to surpass USA in the next ten years. Before an investor started to invest whether the type and level of investment knowledge that he or she has to have, what kind of market is suitable for foreign investors stay outside from China, what type of investor’s behavior such as greedy, risk-adverse, high-risk taker will influence the probability of succeed for an investor. This research study is to determine the potential factors which could bring investors to succeed in China market.

Research objectives

To examine how online investment platform will influence investment in China.

To investigate how knowledge management will influence investment in China.

To establish how market considerations will influence investment in China.

To consider how investor’s behavior will influence investment in China.

Research questions

How online investment platform will influence investment in China?

What type of knowledge management will influence investment in China?

How do market considerations will influence investment in China?

Why investor’s behavior will influence investment in China?

Chapter 2

Successful Investor

The reason to choose China market rather than other developed countries such as United States, Japan and so on because it is smart decision to choose China especially for Asian investors who want to invest outside from their home country. China is a foreign country to invest as China now has the third highest economic purchasing power parity in the world (Wilson and Purushothaman 2003).There are studies shown that, in 2050, China will have largest economic after United States and India. Furthermore, there are 400 companies which from the list of Fortune 500 are having their businesses in China (Hawksworth, 2006)

First of all, the mode of entry used in the journal (Joseph Johnson, 2007) is for firm especially from foreign countries to enter into China market and how the firm market out their products or services and it is a big challenge because foreign firms need new knowledge to enter China’s market. If a foreign firm or institutional investors want to enter China’s market, there are five main types of mode of entry such as export, license and franchise, alliance, joint venture and wholly owned subsidiary. The main component which differentiate the mode of entry is depends how much the degree of control apply by the firm on their entrance into China. Export activities from home country to host country China will have less degree of control from foreign firm, whereas the degree of control is getting higher from franchise, alliance, joint venture and wholly owned subsidiary has the higher degree of control.

Second, the entry time very crucial to investor when they want to enter foreign market for investment especially to those foreigners set up their organizations in China. Firstly, those firms which enter earlier into China market, they can have more chances to observe and exposure to more suppliers and distribution channel. They also can have more time to observe consumer preference and study on the lifestyle of local community. Besides that, usually host country will provide more incentives and loosen their regulation control to those foreign firms which are earlier come into their country. There is proof shown that those foreign firms enter earlier to China market earns more profits compare to those who came later. However, there are researchers claims that first does not means is the best in the term of the timing of entrants enter to China market. Sometimes, there are some foreign firms too rush to enter into host country might not be careful about obstacles exist in the emerging market. For example, those earlier firms which has new businesses in host country might spend more money on infrastructures or marketing strategies to create demand in the market, which help those entrants which come later than them save costs. Besides that, latter foreign firms in host country are believed can perform better because they can learn mistakes and past experiences from earlier firms (Joseph Johnson, 2007).

It is believed that the success rate of entry to China market is higher than India market and the chance for smaller firms is higher compare with larger firms. China financial market is an emerging market with lower openness and lower risk, hence it can be said that is more close to home country for Asian investors in term of economic. If a firm or an investor wants to enter into China financial market, the success rate will be higher if the mode of entry is well-controlled (Joseph Johnson, 2007).

Market Considerations

It is very important to know why China is good place for investment in the eyes of foreigners. According to Hsiang Chih Hwang (2010), "The Hong Kong stock market is the third-largest exchange by market capitalization and the second-largest by number of total listings in Asia-Pacific". The total number of foreign investor’s participation in Hong Kong securities market is more than 40 % of the overall participation. This statement proved that Hong Kong Exchange as one of the largest stock market exchange in China has the efficient platform and information systems, well trained and experienced professionals and transparent regulatory system(Hsiang Chih Hwang,2010).

Recently, Hong Kong is believed as the gateway for foreign firms to enter China, as more and more countries would prefer to invest in Hong Kong as their funds will be float and utilize as investment in China. In time being, Hong Kong will be the potential worldwide resource centre to connect China with other countries. If a foreign firm want to become public-listed, Hong Kong Stock Exchange is a suitable platform to go into China securities market. Hong Kong Stock Exchange is mainly dominated by financial and property companies and resource companies will highly diversify the existing risks (Hsiang Chih Hwang, 2010).

Furthermore, Hong Kong Stock Exchange is not just targeted by Asian countries but United States is top country which taps resources into Hong Kong since the year 2004. The increase trading volume and foreign listings in Hong Kong Stock Exchange also indicated there is more new business opportunities are occurring in China. Hong Kong Stock Exchange is also an international financial centre after London and New York Stock Exchange. The statistics shown in the research study foreign participation is quite high in the Hong Kong securities market and most of them are institutional investors. Besides that, Hong Kong Stock Exchange is applying same policy and requirement to domestic and foreign firms which wish to be listed in their stock exchange (Hsiang Chih Hwang, 2010).

In addition, involvement of foreign investors in Hong Kong Stock Exchange are fully protected by their efficient regulatory system and only companies which are authorised by jurisdiction are allowed to list in stock exchange. In the year 2006, Hong Kong Stock Exchange also recognized Australia and Canada into their jurisdiction and work together with the two countries to clarifying and providing the clear information to foreign companies regarding about the regulatory system and protection matters (Hsiang Chih Hwang, 2010). China is one of the countries which has the most huge energy consumer in the world brings Hong Kong to be new resource centre to attract foreign investments and increase of market liquidity in stock exchange (Financial Times, 19 July 2010).

Hong Kong stock exchange has the highest of IPO (Initial Public Offerings) in their stock market which climbed up from London and New York Stock Exchange. Hong Kong Stock Exchange is named as Big Magnet because it has the greatest potential to attract funds into China.

Investment Online Platform

According to Samtani Anil (n.d), Asian countries such as India, China, Republic of Korea and Japan started from the personal computer (PC) era to mobile Internet access which is another higher stage of e-commerce. Nowadays, Wireless Local Area Network (WLAN or so-called WIFI) is increasing rapidly in all over the world, as people are more convenient to access to internet via their mobile phone, electronic tablets and laptop. In Asian countries, Japan, Republic of Korea and China are doing well in the telecommunication networks and they are the leading countries which have the most advanced information technology in Asia-Pacific countries. China, as former communist country, has opened up their door to the world and telecommunication industry in China is doing well and growth rapidly.

Now, China always have great welcome to outsiders to come in with economic development projects and increase their country’s income, hence they always improve and upgrade their information and communication technology industry. Besides that, China is also a country other than Japan and Australia which has most population and high gross domestic product and encourages more telecommunication investment which will lead the country to be more advanced in the worldwide platform. In 2001, from the data collection shown, the comparison of some Asian countries, China has the second highest revenue in telecommunication sectors while Japan and Korea has the first and third place respectively. Besides that, early of 2000’s, China started have mobile stock trading which initiated by Aerospace Z-Tone Electronics.

Besides that, there are some projects launched by the cooperation and participation from ASEAN countries such as e-ASEAN vision and e-ASEAN framework agreement which are the improvement of ASEAN countries in ICT sector (Samtani Anil, n.d). Hence, for those foreign investors who are from ASEAN countries could have better accessibility with China especially in investment through ICT projects launched in ASEAN countries. Besides that, even e-ASEAN vision is not really involve China, but the e-ASEAN agreement’s objective is to make sure ASEAN e-economy will have sustainable competiveness in world economy with the more efficient and convenient processes from those e-government who are in the e-ASEAN agreement.

Knowledge Management

According to Richard Fairchild (2007), "the market value of a stock should generally be aligned with its fundamental value, and financial markets should react quickly to new information", this statement reflected how important knowledge play roles in investor’s decision, if without the update information and market analysis skills, an investor would not know what kind of investment is suitable for himself.

Sometimes, market condition or investment are fluctuate follows the investor’s decision. If an investor does not have sufficient knowledge, he or she will make mistake as what mentioned in the journal, which discussed about the irrational investor approach which this approach discussed about catering model of dividends and market timing model. In the catering model of dividends, it is about how the irrational investors grouping firms into dividend-paying or dividend-nonpaying. This kind of lack of knowledge investors will prefer to pay premium and invest in those firms which can pay constant dividend to them. However, those investors they do not know if a firm can constantly pay them dividends, means the firm is trying to maximize its current market price by paying dividends but inhibit the long term growth for the firm. The managers of firm will use excess cash to pay dividends to satisfied their investors rather than re-invest in the future for the expansion of business. In market timing models, it discussed about how the manger exploit the market stock price in order to satisfied their long-run investors. In most of the public-listed firms, their stock market price usually are undervalued in order create demand in the stock market (Richard Fairchild 2007).

Besides that, the term of investor not necessary mean personal investor, but it can be a manager from a firm, those managers from business entities also need to use their company cash to make investment in order to accelerate their company’s growth. There is an issue about managerial biases from the manager during investment making decision. It claimed that the most managerial biases are overconfidence from the managers who always over-valued their investment projects. Most of the researchers agreed that overconfidence bring more disadvantages than advantages. Those managers who are overconfident will overestimate their projects and they want to prove to their shareholders and public who underestimate the value of the company. Usually, if most of the managerial decisions from a firm are more towards to investment projects, the CEO of the firm can be classified as overconfident. Besides that, there is argument shows that overconfidence will leads the managers the net present value of investment projects which might be mistaken by them as positive net present value rather than negative net present value. If a public-listed firm has more investment projects in a same time, means it is bearing more risk compare to those companies which have less investment projects but distribute out excess cash as dividends to their long run investors. Overconfidence will also affect managers over forecast their cash flow and take too much of investment projects which might bring negative impact to capital budgeting. This might lead to overestimate the expected returns and underestimate the occur costs for particular project (Richard Fairchild 2007).

Chapter 3: Research Design and Methodology

3.0 Introduction

According to S. Rajasekar (2006), research methodology is needed in research paper in order to present in a more systematic method the way how a problem planned to be solve and the how the research process is to be carried out. Usually, research methodology in a research paper will describe the procedures how the researchers carry out their research jobs, detailed explanations on research jobs and some predictions throughout their research. Research methodology is very important for researchers as a guideline during the time data is collected such as most suitable method for the selected problem, most accurate method to collect result and the efficiency of the method.

Part 1: Framework: It is classified into two; the independent variables (Xs) and dependent variable (Y).

Independent Variables: Investment Online Platform, Knowledge Management, Market Considerations, Investor Behavior.

Dependent Variable: Successful Investor.

Part 2: Hypotheses: They are constructed based on conceptual framework to predict the relationship of determinants (independent variables) and the performance of investor in China market (dependent variable).

 Part 3: Methodology: It presented the method of the study: they are population and sampling, questionnaire design, instruments, data collection method, respond rate, source of data and analysis method.

3.1 Research Design

Quantitative research design was used to determine how investment online platform, knowledge management, market considerations and investor behavior will affect whether an investor can be succeed or not in China market.

3.2 Framework

Independent Variables (IVs)

Investment Online Platform

Knowledge Management

Market Considerations

Investor Behavior

Dependent Variables (DV)

A Successful Investor In China

3.3 Hypothesis

The aim of the research is to determine the relationship between successful investor in China market with the determinants such as online investment platform, knowledge management, market considerations and investor behavior.

Hypothesis 1: To examine whether Online Investment Platform have positive impact on investment in China.

Hypothesis 2: To examine whether Knowledge Management have positive impact on investment in China.

Hypothesis 3: To examine whether Market Considerations have positive impact on investment in China.

Hypothesis 4: To examine whether Investment Behaviors have positive impact on investment in China.

3.4 POPULATION AND SAMPLING

Mkt Intell (2012) defines a sample is a part of an entire population that possesses attitudes, opinions, habits, or characteristics that you wish to study. The sample size to have when conducting the research should not too small or too large as it will influence your mission for your research. Sample size for a research should be appropriate means not too small which might miss out some of the important message, however too big of sample size is discourage as well because it is wasting time and money to collect data.

The population for this study comprised of finance students from SEGi University, finance lecturers and those who have investment background in Malaysia. The selected of sample size either are those who understand who have immediate or advanced knowledge in finance field or who have investment experience. All the participants from the sample size should understand thoroughly the conducted survey. In this research paper, a total of 60 population size were selected for the survey and was considered viable given the resource to proof the hypothesis.

3.5 Questionnaire Design

The questionnaire was designed in the survey are compromised the objective of the research study and framework. All the selected questionnaire in the survey are support the hypothesis which were made earlier in the research study. The conducted survey was divided into two sections which is Part A and Part B. Part A contains questions about the particular details of the respondents which are gender, age group, education qualification, monthly income and area of interest for investment purpose. Part B is a structured questionnaire in which the close-ended method was adopted. The rating used in Part B of the survey is 1 to 5 (Likert rating scale), from rating 1 is strongly disagree,2 for disagree, 3 for neutral, 4 for agree and 5 for strongly agree.

3.5.1 Research Instrument

Some of the questionnaires were printed out and distribute in the SEGi campus and others were sent online through social media google docs. In the first page of questionnaire, it is a cover letter which emphasized the importance of the targeted respondent’s contribution to successful completion of the research.

3.6 Data Collection Method

The data collection for this research was completed in two phase. Below is the explanation of two phases:

Phase 1: Scanning

The questionnaire draft have sent to my supervisor, Dr.Steven to scan all the questionnaire and all the doubts on the questionnaire were cleared out before the questionnaire were distribute out to targeted respondents.

Phase 2: Survey Research

Distribution of questionnaire to targeted respondents and feedback collection completed after targeted sample size reached. About 50% of the research questions were sent through email, social media such as Facebook and 50 % of the research questions were distribute out by printed copies.

3.6.1 Reponses Rate

In total, 60 filled questions were returned, representing the response rate of 60 percent. Thus the analysis was based on the 60 answers got from those who responded (60 percent).

3.6.2 Source of data

The major source of data is primary data derived from questionnaire. The questionnaire was set for those who have finance knowledge or investment experience.

3.7 Data Analysis Method

After the entire data questionnaire collected back from targeted respondents was analyzed by using the SPSS software version 14.0 (statistical package for social science) .The Likert scales is used to measure the degree of agreement by targeted respondents in my research questionnaire about the determinants of a successful investor in China market. In this research questionnaire, all the questions are given rating from 1 to 5 (strongly disagree, disagree, neutral, agree and strongly agree).

Chapter 4: Data Analysis and Findings

4.0 Introduction

In this chapter, the result of the research is presented. First, descriptive statistics was used to describe the personal details of the respondents. Cronbach’s alpha was used to assess the reliability of the questionnaire in the research survey. It is used to test each of the variables whether the questions are able to fulfill the aim of the research project. Correlation test was carried out to examine the extent the independent variables relate with the dependent variables relate with the dependent variable. The use of linear regression is to assess how the dependent variable will be predicted by the independent variables.

4.1 DESCRIPTION OF THE RESPONDENTS’ PROFILE

Gender

Table 4.1

Gender

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

male

23

38.3

38.3

38.3

female

37

61.7

61.7

100.0

Total

60

100.0

100.0

The table shows that among the respondents in this questionnaire survey, 38.3 % were male and 61.7% were female. This indicates that majority of the respondents were female.

Age

Table 4.2

Age

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

less than 40

59

98.3

98.3

98.3

41 to 50

1

1.7

1.7

100.0

Total

60

100.0

100.0

Greater percentages of the respondents (98.3 %) were less has 40 years of age. Followed by those between the ages of 41 to 50 (1.7%).There is no respondents who aged from 51-60, 61-70 and 71 and above. It is difficult to find potential respondents to participant in this survey after 50 years of age.

Education

Table 4.3

Education

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

high school

4

6.7

6.7

6.7

diploma

5

8.3

8.3

15.0

bachelor degree

49

81.7

81.7

96.7

master

2

3.3

3.3

100.0

Total

60

100.0

100.0

Income

Table 4.4

Income

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

less than RM2000

34

56.7

56.7

56.7

between RM2000 to RM4000

18

30.0

30.0

86.7

between RM4000 to RM6000

7

11.7

11.7

98.3

between RM6000 to RM8000

1

1.7

1.7

100.0

Total

60

100.0

100.0

Experience

Table 4.5

Experience

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

less than 1 year

38

63.3

63.3

63.3

1 to 2 years

13

21.7

21.7

85.0

3 to 5 years

3

5.0

5.0

90.0

5 to 10 years

6

10.0

10.0

100.0

Total

60

100.0

100.0

Area

Table 4.6

Area

Frequency

Percent

Valid Percent

Cumulative Percent

Valid

construction

1

1.7

1.7

1.7

communication

1

1.7

1.7

3.3

manufacturing

5

8.3

8.3

11.7

banking and finance

14

23.3

23.3

35.0

property and real estate

37

61.7

61.7

96.7

others

2

3.3

3.3

100.0

Total

60

100.0

100.0

4.2 Reliability

Reliability test assess the consistency of the items included in the variables. It indicates the direction of the items in the questionnaire and the extent to which they correlate with one another. The importance of reliability test is that it provides a measure of the extent to which the Likert scale reflect random measurement error. The Cronbach’s alpha was used in testing the reliability. Although there are other reliability tests, the choice of Cronbach’s alpha is based on the fact that it measurement error.

Table 4.3 B

Variables

Number of items.

Cronbach’s Alpha

Remarks

Successful Investor

5

0.700

Reliable

Investment Online Platform

5

0.759

Reliable

Knowledge Management

5

0.724

Reliable

Market Consideration

5

0.740

Reliable

Investor Behavior

5

0.702

Reliable

In table 4.2B above, the alpha for successful investor was 0.700, investment online platform was 0.759, and knowledge management was 0.724, market consideration was 0.740 and investor behavior was 0.702. This shows that the entire questionnaire has reasonable internal consistency reliability. In general, it can be said that the respondents understood the research questions.

4.3 Correlation Test Result

Correlation test result is a measurement of relationship between dependent variable and independent variable in research study. This result shows that how changes in one variable will affect the other variable. The relationship ranges from -1 to +1, -1 been perfect negative correlation, 1 equals perfect positive relationship. When the value is zero, it shows that there is no correlation between dependent variable and independent variable.

The table below shows that the summary of the correlation result between successful investor in China market and the independent variables such as knowledge management, market considerations and investor behavior.

Variables

Correlations with Successful Investor

Sig.

Remark

Investment online Platform

0.991

0.00

Strongly correlation

Knowledge Management

0.927

0.302

Strongly correlation

Market Considerations

0.897

0.489

Strongly correlation

Investor Behavior

0.853

0.766

Strong

From the table above, investment online platform has 0.991 correlations with successful investor. This implies that there is strong relationship between successful investor and online investment platform. Besides that, knowledge management, market considerations and investor behavior have strong correlation with successful investors.

4.4 Result of the hypothesis test

The hypothesis test is aimed at examining whether each independent variable (knowledge management, market considerations, and investor behavior) has impact on the dependent variable (successful investor) and to prove or disprove the hypothesis as stated in the literature.

Hypothesis 1:

Online investment platform has significant impact on successful investor in China market. Online investment platform has positive correlation with successful investor in China market, as online investment platform has significant level p = [0.000] < 0.05. The independent variable is accepted by the SPSS software 14.0. This implies that monetary policy has significant impact on successful investor in China market.

Hypothesis 2:

Knowledge management has no significant impact on successful investor in China market. Knowledge management has significant level p= [0.302]>0.05. The independent variable is rejected by the SPSS software 14.0. This implies that knowledge management has no significant impact on successful investor in China market.

Hypothesis 3:

Market considerations have no significant impact on successful investor in China market. Market considerations have significant level p=[0.489]>0.05. The independent variable is rejected by the SPSS software 14.0. This implies that market considerations have no significant impact on successful investor in China market.

Hypothesis 4:

Investor behavior has no significant impact on successful investor in China market. Investor behavior has significant level p=[0.766]>0.05. The independent variable is rejected by the SPSS software 14.0. This implies that investor behavior has no significant impact on successful investor in China market.

4.5 Model Specification

SI = -0.045+ 1.009IOP + 0.049KM + 0.028MC -0.011IB + e

R2 = 98.2%

Table 4.4 C (Model Summary)

Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

Change Statistics

R Square Change

F Change

df1

df2

Sig. F Change

1

.991(a)

.982

.982

.05197

.982

3179.269

1

58

.000

a Predictors: (Constant), tot_IOP

Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

Correlations

B

Std. Error

Beta

Zero-order

Partial

Part

1

(Constant)

-.045

.077

-.588

.559

tot_IOP

1.009

.018

.991

56.385

.000

.991

.991

.991

Coefficients

a Dependent Variable: tot_SI

Excluded Variables(b)

Model

Beta In

t

Sig.

Partial Correlation

Collinearity Statistics

Tolerance

1

tot_KM

.049(a)

1.042

.302

.137

.138

tot_MC

.028(a)

.697

.489

.092

.191

tot_IB

-.011(a)

-.299

.766

-.040

.254

a Predictors in the Model: (Constant), tot_IOP

b Dependent Variable: tot_SI

R2

This implies that 98.2 % variance of successful investor in China market can be predicted by combination of online investment platform, knowledge management, market considerations and investor behavior. And about 1.8% is explained by the error term.

4.6 Discussion of the findings

The model indicated a positive relationship between successful investor in China financial market and independent variables. This also confirms the literature and the hypothesis which stated that online investment platform, knowledge management, market considerations and investor behavior is important to drive an investor either to succeed or fail in China financial market.

Every unit of Investment Online Platform will drive 1.009 Successful Investor.

The combination of online investment platform, knowledge management, market considerations and investor behavior will contribute 98.2% of Successful Investor. The rest are due to other variables which do not include in the scope of study.

.

Chapter 5

5.1 Summary

In this research study, several determinants have been identified to be the major factors for an investor to succeed in China financial market. In order, to narrow down the scope of study, the process of journals readings gone through before finalize the numbers of determinants to be discussed in the research study. Before research works has started, the research framework and the four main determinants were published out which are online investment platform, knowledge management, market considerations and investor behavior. Through the distribution of questionnaire survey, the ideas of respondent were collected and input into SPSS software 14.0 for data analysis. The result from data analysis was all input into tables and comments were made. There is only one independent variable is accepted into system and the rest are rejected. Recommendations were figured out to know the reason why the other three independent variables are rejected.

5.2 Conclusion

In order to invest in China financial markets, there are a lot of issues need to be taken into considerations besides the four independent variables discussed in the research study. Even though, only Investment Online Platform with alpha value below 0.05 is accepted. The other three independent variables which are knowledge management, market considerations and investor behavior are rejected, yet their existences are still believed have significant contribution to the successful investors in the China financial market. To be successful investor in China, we need a good investment online platform and further research study might conduct in future. The rest of rejected independent variables are suggested to have further research to know the reason why they are rejected. Maybe the respondent cannot respond to the questionnaire correctly due to lack of experience investing in China. Most of the respondents felt that investment online platform is very crucial to invest in China due to their knowledge about foreign securities markets.

From the journal readings, China are growing rapidly with the knowledge of information technology they have can compete with Japan and United States. It seem the information technology is manipulating the China financial market and people who have well-managed skills would able to follow the speedy trend over there. Besides that, from the summary of journals which have read through to support the research study, other independent variables also playing important roles as it is impossible for an investor who is lack of knowledge to invest in China financial market, neither do not know anything about the market performance nor what is their expectation for their investment return. This is very dangerous situation where investors will have high probability of failure if they cannot fulfill the requirements they supposed to have.

5.3 Recommendations

In this research study, the Investment Online Platform is accepted in SPSS system, hence it means Investment Online Platform is very crucial for foreign investors to empower the knowledge about it. There is a good suggestion whereby more research study should be conducted to explore more about the influence of Investment Online Platform affect China financial market and perhaps more and more Asian countries even developed countries such as United States and European countries would cooperate together to develop the investment platform in China, which increase the market liquidity and capability and brings effect towards the globe. However, there is a necessity to know why other independent variables are rejected as following from the information in the journals found, the three rejected variables are very crucial as well to drive an investor to success in his or her investment path. Perhaps, there is the possibility that the respondents for the questionnaire do not aware about the importance of other variables due to lack of exposure to China financial market.

5.4 Contributions of the study

This study would aid to enhance the investor’s skills who are interested to invest in China financial market by having more understanding of the condition and requirement for foreign investment. As stated in the literature, China has the efficient and sufficient market liquidity stock exchange for investment and the country has opened up their gateway for foreign investment and funds to enter. The country’s economy is one of the best growing economies today compare to some developed countries such as United States, Japan and European countries.

5.5 Limitations of the study

This research study only covered the respondents who have Malaysian citizenship who are from Klang Valley, Selangor, Malaysia. The total number of respondents is small which only have 60 respondents towards the distributed questionnaire survey. The time constraint for this research study is limited which inhibit further research to be made. Besides that, there is no control over the false reporting as some of the respondents are from online sources.