Assessment of volatility of stock prices of companies listed on Uganda Securities Exchange for the past four years (2011-2014): Case study of Stanbic Bank Uganda

Abstract

The study of stock price behavior is an interesting area of research in the entire world. Unlike Africa particularly Uganda where the Stock market is just growing and few researchers have taken up the initiative to look at Stock exchange as a lucrative area of learning so as to provide a basis for investors to gain momentum or drive or passion to taste the waters of opportunities that lies in investing in the Stock market. In developed economies, the Stock market is viewed as a parameter for economic growth. It is a measure of economic performance and projections of economic depression, recession or progression unlike in developing economies. The researcher was motivated to carry out a research on the volatility of Stock exchange prices of Companies listed on the Uganda Securities Exchange (USE) with a focus on Stanbic Bank Uganda. The researcher carried out a thorough analysis on the dynamics surrounding the Stock exchange market in Uganda including the causes of stock price volatility, level of performance of Stock on the exchange and finally formulated a decision making model to enable investors make informed investment choices on the Uganda Securities Exchange. The study supplements on the body of knowledge both in the field of academia, practicing investment advisory/finance and regulatory framework or policy making bodies. This is because present studies in Uganda had their focus on investor awareness, investor confidence and regional capital markets performance and this study sparked a new level of thinking and will inspire financial engineers to thoroughly explore the dynamics of securities on the Uganda Securities market not only on stocks as it is for this study but also on bonds. The findings of the research confirmed that all the identified causes of stock price volatility applies to Uganda Securities Exchange. The Study explored the levels of performance of Shares on the USE. The study finally proposed and formulated a statistical decision making model among other findings to aide investors to make optimum investment choices. The study also proved beyond reasonable doubt that USE participants are optimistic that the East African Community integration is likely to spur growth of the Securities market in Uganda.