Limitations of middle asia stock exchange index, Finance Basics

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Limitations of Middle Asia Stock Exchange Index

1. The twenty (20) company's sample whose share prices are utilized to calculate the index are not true representatives.

2. The base year of 1996 is also far in the past

3. New companies are not involved in the index yet other firms have been suspended or deregistered like KFB and ATH.

4. Dormant firms - Some of the twenty (20) firms utilized are dormant or have extremely small price changes.

5. Thinness of the market - small changes in the active shares tend to be considerably magnified in the index

6. The weights utilized and the technique of computation of index may not provide a truly representative index.


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