Global Advisers Company (GAC) is a registered investment counseling firm solely
involved in managing international securities portfolios. After much research on the
trades made by nonresidents. Senior finance officials in the government are working
to deregulate capital flows and foreign ownership, but GAC’s political consultant
believes that isolation sentiment may prevent much real progress in the short term run.
a) Briefly discuss four aspects of the South Korea’s environment that favour investing
actively and four aspects that favour indexing.
High transaction costs- it discourages foreign investors from engaging in active trade and this may lead to inefficiencies that can be exploited by other active investors.
Capital restrictions- restrictions on capital flow discourages international businesses from trading and this may segment South Korea’s market
Detailed account standards and good financial disclosure- it offers business analysts a chance to investigate the market for them to discover inefficient priced insecurities.
Economic diversity- the economic diversity in South Korea’s will offer the international investors an opportunity to implement efficient strategies.