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The Impact of Foreigners’ Trades on Equity Prices: Evidence from Macedonian Stock Exchange
- Source :
- South East European Journal of Economics and Business, Vol 15, Iss 1, Pp 56-65 (2020)
- Publication Year :
- 2020
- Publisher :
- Sciendo, 2020.
-
Abstract
- Emerging countries’ economies are dependent on foreign capital inflows. For policy makers and researchers of particular interest is to understand the nature of these flows and their impact on the domestic capital market. The first significant foreign inflows entered the Macedonian Stock Market at the end of 2004, and stock prices were increased. It was general belief among the investors that foreigners are driving the prices on the Macedonian Stock Market. This study examines the influence of foreign investors’ trades on stock returns in Macedonia using base broadening and price pressure hypotheses. Strong evidence consistent with the base-broadening hypothesis shows that 1% of monthly net inflows as a percentage of last month market capitalization is connected with 7% rise in monthly returns on the Macedonian stock market. The findings do not support the price pressure hypothesis, so the rise in the prices is permanent.
- Subjects :
- Market capitalization
base broadening
HF5001-6182
g14
Monetary economics
o16
Stock exchange
0502 economics and business
Economics
foreign investor
Business
050207 economics
Emerging markets
Stock (geology)
050208 finance
equity price
macedonian stock market
05 social sciences
Equity (finance)
Macedonian
General Business, Management and Accounting
language.human_language
price pressure
language
Stock market
f32
General Economics, Econometrics and Finance
Capital market
Subjects
Details
- Language :
- English
- ISSN :
- 22331999
- Volume :
- 15
- Issue :
- 1
- Database :
- OpenAIRE
- Journal :
- South East European Journal of Economics and Business
- Accession number :
- edsair.doi.dedup.....72040f03dd8f8f3cb6ebd1356895c3e9