How efficient markets are?

Money is expected to generate when investor invest their money into stock market.  It is known that many investors do not only aim for profitable return, but they, too, try to outperform the market. Market efficiency will always be reflected on all available information on a particular stock or market at any given time.  Companies do not reveal all information, or no one can actually have access to all information that a company has to take advantage in predicting a return of a stock.  We know that there are 3 forms of efficiency which are weak form efficiency, semi-strong form efficiency and strong form efficiency which were identified by Fama (1970).

Earlier this month, Glencore announced to cut zinc production by a third has effectively boost up zinc's price as well as its share price. Previously, commodity prices were falling so badly that Glencore, as one of the biggest commodity company, was battling with the fall of the price too.  With its announcement of cutting zinc production, Glencore's share price increased to 133p.  The sudden announcement caused investors to invest in this stock because zinc's price has always been low for few years and its sudden production cut have increased the zinc's price which increases its share value.

Heath Jansen, who is an analyst at Citigroup, believes that Glencore is protecting its value by cutting production which is not profitable.  Personally, I think that Glencore has made the right decision in cutting zinc production as it is trying to save the company from falling to its ground and that decision has definitely covered some of its debts, although not entirely. 

So, how did this news affect the market efficiency? 

As we can see, the announcement of cutting zinc production has led to an increase in Glencore's share price.  Due to this, can we conclude that investors are acting and responding rationally?  However, in my opinion, I think it is based on how investors perceive and interpret the news in their own ways.  There are rights and wrongs in making decision, but at the end of the day, it all comes down to investors' piece of mind of looking at it.  The 'random walk' prices was discussed in class that price changes in random fashion and share prices reflects all known information by the public at any time; which includes a few factors such as government, international transactions, speculation and expectation and supply and demand.