Friend or Foe?: Foreign Investors and the Liquidity of Six Asian Markets

Serie

  • Documentos de Trabajo CIEF

Resumen

  • Studying Foreign flows and the liquidity of six Asian markets we provide evidence of two empirical regularities: On the one hand, foreign trade has a negative but transitory impact on the overall liquidity of the market on a daily basis. This finding is shown consistent with two hypotheses: that foreign investors demand liquidity more aggressively than locals, and, to a lesser extent, that foreigners incorporate market-wide information. On the other hand, the overall share of foreign ownership in the market is positively related to improved liquidity, as showing a sample of emerging markets, after controlling for a set of confounding factors. Overall, the results portray foreign investors as aggressive liquidity demanding, and nevertheless having a positive effect on the liquidity in short horizons.

fecha de publicación

  • 2010-07

Enfoque geográfico

Líneas de investigación

  • Asian Markets
  • Foreign Investors
  • Liquidity

Issue

  • 10653