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Whether Consumer Satisfaction Benefits The Investment Portfolio: Empirical Evidence From Hong Kong

Author

Listed:
  • JIN LI

    (School of Economics and Management, Xidian University, Xi’an 710071, P. R. China)

  • GEOFFREY TSO

    (College of Business, City University of Hong Kong, Tat Chee Avenue, Kowloon, Hong Kong SAR)

  • DON WU

    (Institute for Tourism Studies, Colina de Mong-Ha, Macao SAR)

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.

Suggested Citation

  • Jin Li & Geoffrey Tso & Don Wu, 2023. "Whether Consumer Satisfaction Benefits The Investment Portfolio: Empirical Evidence From Hong Kong," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(02), pages 485-506.
    • Handle: RePEc:wsi:serxxx:v:68:y:2023:i:02:n:s0217590819500152
    DOI: 10.1142/S0217590819500152
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    Keywords

    Company performance; consumer satisfaction; investment portfolio; Hong Kong; linear regression; portfolio optimization; Capital Asset Pricing Model;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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