Does the Weight of Funds support equity prices on the Johannesburg Stock Exchange?

Abstract

This paper questions the belief that in South Africa large institutional cash flows, the weight of funds, support equity prices on the Johannesburg Stock Exchange. The paper suggests that this belief is conceptually flawed and that it conflicts with established portfolio and efficient asset market theory. An attempt was made to test possible implications of the weight of funds. However, the empirical evidence failed to support any of the suggested hypotheses. It was concluded that investors should disregard claims that the weight of funds supports equity prices on the JSE during either bull or bear market conditions.