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Professional thesis
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Value Assessment and Market Analysis of Jade in Chinese Domestic Market based on Economic Value Added (EVA) and Fama-French Five-Factor Models

ContributorsWang, Weibin
DirectorsBerrada, Tony
Number of pages51
Imprimatur date2020
Defense date2020
Abstract

As one of the oldest gemstones in the world, jade has high cultural and commercial value worldwide, especially in China (Shan, 2018). However, unlike gold or silver with a fairly objective market price based on the weight and purity, jade is a high-risk asset for investors due to its violent price fluctuations caused by the quality variance of each product and the inconsistency of jade pricing (Chovanec, 2010).

To provide a clearer insight into the development trend of China’s jade industry and practical investment suggestions for investors, this thesis conducted the quantitatively and qualitative analysis based on empirical data as follows:

In chapter one, this thesis reviews the background and development history of jade in China’s domestic market and reviews relevant literature about important asset valuation methods and pricing models that applicable for China’s domestic stock market.

In chapter two, this thesis’s methodologies and theories are clarified, including the PESTLE model, value investing strategy, fundamental analysis, Fama-French five-factor model, absolute valuation and relative valuation, and the economic value added (EVA) approach.

In chapter three, this thesis analyzes the trend, status and potential risks of China’s jade industry, using the PESTLE analysis method to discuss from political, economic, social, technological, legal and environmental factors. Compared with the traditional PEST model that just covers political, economic, social, and technical aspects, the advanced PESTLE model can provide a more comprehensive overview of China’s jade industry’s macro-environment.

In chapter four, this thesis conducts an empirical analysis of China’s jade industry’s investment value and individual stocks. This part compares the historical returns of China’s jade industry with the market index (CSI 300) in the past ten years; conducts regression analysis on Fama-French five-factor model to evaluate influencing factors of the average return of China’s jade industry and individual companies; uses the economic profit (EVA) analysis and the relative valuation indicators to compare the capital operation ability, market valuation and growth potential of each company.

According to the above analysis, China’s jade industry has great expansion potential but with particular challenges in raw material scarcity, product quality control and stringent environmental protection policies. In addition, the Matthew effect is significant in China’s jade industry: the stock performance of leading companies (Lao Feng Xiang and Chow Tai Seng) is significantly better than that of the non-leading companies.

In the last chapter, this thesis summarizes all findings, provides a range of investing implication for existing and prospective investors based on the value investing strategy, points out the limitations of this thesis, and offers perspectives on future research and China’s jade industry.

eng
Keywords
  • Economic Value Added (EVA)
  • Fama-French Five-Factor Model
  • Matthew Effect
  • PESTLE Model
  • Relative Valuation
Citation (ISO format)
WANG, Weibin. Value Assessment and Market Analysis of Jade in Chinese Domestic Market based on Economic Value Added (EVA) and Fama-French Five-Factor Models. 2020.
Main files (1)
Thesis
accessLevelPublic
Identifiers
  • PID : unige:177919
  • Thesis number : 0039
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Creation06/17/2024 11:46:20 AM
First validation06/18/2024 6:08:41 AM
Update time06/18/2024 6:08:41 AM
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