The Ting Hai effect is a Hong Kong stock market phenomenon in which there is a sudden and unexplained drop in the stock market. The effect is named after Ting Hai, the main character in the drama The Greed of Man, who was portrayed by Adam Cheng. Initially, the Ting Hai effect occurred whenever the drama or its sequel was broadcast in Hong Kong. However, it was observed later that the phenomenon also takes place whenever a new film or a television series starring Adam Cheng is released. In the two decades since 1992, nearly every time Cheng has appeared in a movie or television show which has been more than 30 times the Hang Seng Index declined.

(a) Assume that some investors did take advantage of Ting Hai effect and made abnormal profit from it. Judge whether any form of market efficiency is violated in the Hong Kong stock market. Explain your reasoning.

(b) You are a financial advisor, and your client Alice is an Adam Cheng fan. A new film of Adam will be released in 2 weeks time, and Alice is asking whether she should sell all her positions now. How should you respond?