New FDI rules cast a shadow over Japan’s stock market

2019 ◽  
Keyword(s):  
Stock Market ◽  
Foreign Trade ◽  
Foreign Exchange ◽  
Foreign Investment ◽  
Content Type ◽  
Japanese Companies

Subject Reform of foreign investment regulations in Japan. Significance The cabinet has approved revisions to the Foreign Exchange and Foreign Trade Act that impose tougher controls on foreign investment in Japanese companies in strategically sensitive industries. The proposal is scheduled for submission to parliament before the current session ends next month. It is likely to pass and could take effect by March 2021. Its full effects will become clear only once the ministries publish rules that clarify ambiguities and as experience accumulates of how it is implemented in practice. Impacts Investors may become more cautious about their acquisitions, but could still be caught in time-consuming bureaucratic reviews. Despite government attempts to allay concerns, the role of foreign activist shareholders in Japanese companies will be tempered. The rules will not necessarily actually block investments, but will delay many and might deter some from even being attempted.

TRANSFORMATION OF FOREIGN TRADE POLICY AMID THE COVID-19 PANDEMIC

2021 ◽  
pp. 74-82
Author(s):  
Vladimir M. Kutovoi ◽  
Keyword(s):  
Foreign Trade ◽  
Trade Policy ◽  
National Security ◽  
Economic Crisis ◽  
Foreign Investment ◽  
International Investment ◽  
Investment Climate ◽  
Foreign Trade Policy ◽  
Investment Policies

The ongoing coronavirus pandemic has seriously affected the international investment policies of the G20 countries. There has been a growing trend to introduce measures with reference to the protection of national security aiming at countering threats that may be associated with foreign investment. Given the role of international investment in alleviating the economic crisis, governments should continue to improve the investment climate while protecting their national security interests.

Financial Marketing-Based Role of Exchange Rate to Increase Foreign Trade in Turkey

2020 ◽  
pp. 21-46
Author(s):  
Özgür Kiyak ◽  
Bilge Afşar
Keyword(s):  
Exchange Rate ◽  
Foreign Trade ◽  
Foreign Exchange ◽  
Cointegration Analysis ◽  
Causality Analysis ◽  
Monthly Data ◽  
Decrease Rate ◽  
Long Run ◽  
Causality Relationship

This chapter tries to determine whether there is a causal relationship between exchange rate and foreign trade. The study includes monthly data between February 2003 and December 2018 including dollar foreign exchange selling rate and inflation related real exchange rate for exchange rate, and export amount, import amount, export increase/decrease rate, and import increase. Increase/decrease rate is used for foreign trade among other variables, for a total of 6 variables. According to the obtained results of Engle-Granger cointegration analysis, there is a cointegration between variables in the long run. However, according to the results of the Toda-Yamamoto causality analysis, it was understood that there is no causality relationship between exchange rate and foreign trade.

Stock market performance and foreign exchange market in Egypt: does 25th January revolution matter?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed A. El-Masry ◽  
Osama M. Badr
Keyword(s):  
Stock Market ◽  
Causal Relationship ◽  
Foreign Exchange ◽  
Foreign Exchange Market ◽  
Market Performance ◽  
Exchange Market ◽  
Content Type ◽  
Stock Market Performance ◽  
Portfolio Managers ◽  
Market Indexes

PurposeThis paper examines the causal relationship between stock market performance and foreign exchange market in Egypt over the period 2009–2016. The study period is divided into two sub-periods: pre- and post-January 25th Egyptian revolution (ER). The reason is to examine how this revolution affects the causal relationship between the two markets' performance.Design/methodology/approachIn this study, the daily basis data are used to enable good and effective observation changes in the foreign exchange rate and stock market performance over time. Stock market indexes and stock market capitalization are used as proxies for stock market performance. Further, the Egyptian pound to US$ exchange rate is used as a measure for foreign exchange market performance. The study analysis is done in stages. The first is to check the variables' stationarity for the pre- and post-revaluation. The second is to examine the cointegration among the variables. The third is to run vector autoregression (VAR) estimates, after which VAR Granger causality tests are employed.FindingsThe results show that the data are not stationary at their levels but stationary in their first difference level while there is no cointegration in the long-run among the variables in both sub-periods. Further, findings indicate that, in the pre-January 25th revolution period, there is a significant causal relationship between the foreign exchange market and stock market indexes and a significant causal relationship between market capitalization (CAP) and exchange rate at the 1% level. However, in the post-January 25th revolution period, the study does not find a significant causal relationship between foreign exchange market and stock market indexes and capitalization.Research limitations/implicationsAs this study focuses on the causal relationship between foreign exchange and stock markets before and after the 25th January Revolution, other macroeconomic variables such as consumer price index, interest rate and GDP were excluded for the comparison purposes with other studies. Further research is suggested to include them in the analysis to find out its effect on the performance of stock market and foreign exchange market.Practical implicationsThe existence of long-run bidirectional causality means that portfolio managers and hedgers may have improved their understanding regarding the dynamic relationship between foreign exchange market and stock market performance as this may help them to plan and implement suitable hedging strategies to guard against currency risk in future crises or events. Investors, fund and portfolio managers and policymakers should give much attention to these event-specific interactions when they make capital budgeting decisions and implement regulation policies. Furthermore, our results may allow portfolio managers, investors and policymakers to assess the importance of informational efficiency for both markets.Originality/valueThis paper is an original contribution to the literature that concerns the causal relationship between stock market and foreign exchange market in the period of political instability and social unrest such as the January 25th Revolution in one of the emerging markets, namely Egypt.

Cultural traits and stock market development: an empirical analysis

2015 ◽  
Vol 4 (1) ◽  
pp. 33-49 ◽  
Author(s):  
Nabamita Dutta ◽  
Deepraj Mukherjee
Keyword(s):  
Stock Market ◽  
Uncertainty Avoidance ◽  
Market Development ◽  
Cultural Dimension ◽  
Content Type ◽  
Stock Market Development ◽  
Cultural Trait ◽  
Cross Country ◽  
Cultural Traits

Purpose – During recent times, the stock market has emerged as a major financial institution of an economy. Yet, cross-country differences, in size and role of stock market, persist. The purpose of this paper is to investigate the correlation between cultural traits and the development of the stock market in a country. Considering multiple dimensions of culture, identified in the literature by Hofstede (1980/2001) and World Value Survey, the authors construct the hypotheses: trust, a key cultural trait, should positively influence stock market development; uncertainty avoidance, Hofstede’s cultural dimension should negatively influence the development of the stock market; and individualism, an alternate cultural dimension of Hofstede’s measures, should be positively correlated with stock market development. The cross-country empirical analysis supports the hypotheses. The results hold for multiple measures of stock market development. Design/methodology/approach – This paper investigates the correlation between various cultural traits and the development of the stock market in a country. Specifically, the authors consider three different cultural trait measures. The authors consider a cross-sectional analysis of an extensive number of countries. While all explanatory variables of interest are considered over the period 2000-2007, the authors consider 2008 figures for the dependent variables of interest, financial development. Ordinary least squares is considered as the benchmark specification. Robust regression has been considered as part of robustness analysis. The authors mention throughout the paper that the results stress on significant association between the variables, only. Findings – The empirical results support the hypotheses. The first measure, trust, is positively associated with stock market development of a nation. Statistically, for one standard deviation rise in trust (1 SD=37.5), stock market capitalization will go up between 11 and 19 percentage points. Uncertainty avoidance, the second measure is negatively correlated and statistically, the impact is much greater. Finally, the third measure, individualism, is positively correlated with stock market development. Statistically, for one SD rise in individualism (SD=23.9), stock market capitalization will rise by 23 percentage points. Originality/value – Existing literature has stressed the role of cultural traits – trust, uncertainty avoidance, individualism – in the promotion of entrepreneurship, innovation and growth. Since most startups need to raise capital in order to implement their new ideas, cross-country heterogeneity in the strength of capital markets may lead to important differences in entrepreneurship and productivity growth across economies (Greenwood and Jovanovic, 1990; Jayaratne and Strahan, 1996; Levine, 1997; Beck et al., 2000; Guiso et al., 2004). Yet, the link between stock market development and cultural traits has not been established in the literature. This paper aims to fill this missing link.

scholarly journals Downside systematic risk in Pakistani stock market: role of corporate governance, financial liberalization and investor sentiment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shahzad Hussain ◽  
Muhammad Akbar ◽  
Qaisar Ali Malik ◽  
Tanveer Ahmad ◽  
Nasir Abbas
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Financial Liberalization ◽  
Investor Sentiment ◽  
Systematic Risk ◽  
Downside Risk ◽  
Market Volatility ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of corporate governance, investor sentiment and financial liberalization on downside systematic risk and the interplay of socio-political turbulence on this relationship through static and dynamic panel estimation models. Design/methodology/approach The evidence is based on a sample of 230 publicly listed non-financial firms from Pakistan Stock Exchange (PSX) over the period 2008–2018. Furthermore, this study analyzes the data through Blundell and Bond (1998) technique in the full sample as well sub-samples (big and small firms). Findings The authors document that corporate governance mechanism reduces the downside risk, whereas investor sentiment and financial liberalization increase the investors’ exposure toward downside risk. Particularly, the results provide some new insights that the socio-political turbulence as a moderator weakens the impact of corporate governance and strengthens the effect of investor sentiment and financial liberalization on downside risk. Consistent with prior studies, the analysis of sub-samples reveals some statistical variations in large and small-size sampled firms. Theoretically, the findings mainly support agency theory, noise trader theory and the Keynesians hypothesis. Originality/value Stock market volatility has become a prime area of concern for investors, policymakers and regulators in emerging economies. Primarily, the existence of market volatility is attributed to weak governance, irrational behavior of market participants, the liberation of financial policies and sociopolitical turbulence. Therefore, the present study provides simultaneous empirical evidence to determine whether corporate governance, investor sentiment and financial liberalization hinder or spur downside risk in an emerging economy. Furthermore, the work relates to a small number of studies that examine the role of socio-political turbulence as a moderator on the relationship of corporate governance, investor sentiment and financial liberalization with downside systematic risk.

The role of government in the tourism sector in developing countries: a perspective article

2020 ◽  
Vol 75 (1) ◽  
pp. 203-206
Author(s):  
Carson Lewis Jenkins
Keyword(s):  
Developing Countries ◽  
Regional Development ◽  
Foreign Exchange ◽  
Design Methodology ◽  
Role Of Government ◽  
Content Type ◽  
The Past ◽  
Tourism Sector ◽  
Employment Generation

Purpose The purpose of this paper is to provide a perspective on the role of government in the tourism sector in developing countries in the past 75 years. Design/methodology/approach A perspective article. Findings The main reasons that governments support development of tourism will remain: including foreign exchange earnings, contribution to government revenues, employment generation and regional development stimulus. Originality/value This paper provides a perspective from a senior academic who specialises in the field of tourism relating to the developing world.

Determinants of foreign investment in Pakistan

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Safi Ullah ◽  
Muhammad Tahir
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Foreign Investment ◽  
Series Data ◽  
Portfolio Investment ◽  
Firm Level ◽  
Content Type ◽  
Foreign Portfolio Investment ◽  
Country Level ◽  
Depositary Receipts

PurposeThe purpose of this study is to examine the effect of country- and firm-specific factors on foreign investment in Pakistan.Design/methodology/approachThis study uses time-series data for country-level determinants and uses panel data for 100 listed non-financial companies selected based on market capitalisation from 2005 to 2015.FindingsFindings suggest that the stock market returns and liquidity of the country significantly positively influence the foreign portfolio investment (FPI) in Pakistan. Whereas, economic growth surprisingly is negatively related to foreign portfolio investment. In addition, findings reveal that firm size, financial leverage, dividend yield and global depositary receipts (GDR) have a positive impact on the total foreign investment at firm level. Further, foreign institutional investors prefer to invest in those firms that are large, pay high dividends and issue GDR. Furthermore, findings suggest that foreign direct investors tend to invest in firms that are financially leveraged and have low capital gain yield.Practical implicationsAt the country level, this study recommends that stock market performance, economic growth and foreign reserves of the country should be maintained and improved to attract FPI. At the firm level, this study recommends issuance of global depositary receipts and high dividend payouts for those firms that are interested in institutional investment in Pakistan.Originality/valueTo the best of authors' knowledge, this study is the first that examines the effect of firm-level factors along with country-level factors on foreign investment in Pakistan.

scholarly journals The role of liquidity in asset pricing: the special case of the Portuguese Stock Market

2017 ◽  
Vol 22 (43) ◽  
pp. 191-206 ◽  
Author(s):  
María del Mar Miralles-Quirós ◽  
José Luis Miralles-Quirós ◽  
Celia Oliveira
Keyword(s):  
Asset Pricing ◽  
Stock Market ◽  
Stock Returns ◽  
Stock Markets ◽  
Emerging Market ◽  
Methodological Approach ◽  
Model Framework ◽  
Content Type ◽  
Previous Evidence

Purpose The aim of this paper is to examine the role of liquidity in asset pricing in a tiny market, such as the Portuguese. The unique setting of the Lisbon Stock Exchange with regards to changes in classification from an emerging to a developed stock market, allows an original answer to whether changes in the development of the market affect the role of liquidity in asset pricing. Design/methodology/approach The authors propose and compare two alternative implications of liquidity in asset pricing: as a desirable characteristic of stocks and as a source of systematic risk. In contrast to prior research for major stock markets, they use the proportion of zero returns which is an appropriated measure of liquidity in tiny markets and propose the separated effects of illiquidity in a capital asset pricing model framework over the whole sample period as well as in two sub-samples, depending on the change in classification of the Portuguese market, from an emerging to a developed one. Findings The overall results of the study show that individual illiquidity affects Portuguese stock returns. However, in contrast to previous evidence from other markets, they show that the most traded stocks (hence the most liquid stocks) exhibit larger returns. In addition, they show that the illiquidity effects on stock returns were higher and more significant in the period from January 1988 to November 1997, during which the Portuguese stock market was still an emerging market. Research limitations/implications These findings are relevant for investors when they make their investment decisions and for market regulators because they reflect the need of improving the competitiveness of the Portuguese stock market. Additionally, these findings are a challenge for academics because they exhibit the need for providing alternative theories for tiny markets such as the Portuguese one. Practical implications The results have important implications for individual and institutional investors who can take into account the peculiar effect of liquidity in stock returns to make proper investment decision. Originality/value The Portuguese market provides a natural experimental area to analyse the role of liquidity in asset pricing, because it is a tiny market and during the period studied it changed from an emerging to a developed stock market. Moreover, the authors have to highlight that previous evidence almost exclusively focuses on the US and major European stock markets, whereas studies for the Portuguese one are scarce. In this context, the study provides an alternative methodological approach with results that differ from those theoretically expected. Thus, these findings are a challenge for academics and open a theoretical and a practical debate.

An investigation of the post-privatization firms’ financial performance in Nigeria: the role of corporate governance practices

2019 ◽  
Vol 19 (3) ◽  
pp. 404-418 ◽  
Author(s):  
Ojonugwa Usman ◽  
Umoru Adejo Yakubu
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Financial Performance ◽  
Stock Exchange ◽  
Market Development ◽  
Board Composition ◽  
Content Type ◽  
Stock Market Development ◽  
Governance Practices

Purpose The purpose of this study is to investigate the role of corporate governance practices on the post-privatization financial performance of the firms listed on the Nigerian Stock Exchange (NSE) over the period 2005-2014. Design/methodology/approach The study uses a two-step dynamic system Generalized Method of Moments (GMM) estimation technique for 27 privatized firms by considering a wide range of controlled variables such as managerial shareholdings, board composition, debt financing and stock market development. Findings The empirical result suggests that the improvement in the firms’ financial performance is attributed to good corporate governance practices through effective board composition, debt financing (leverage) and stock market development. The result further shows no substantial evidence to support that managerial shareholding improves firms’ financial performance. Research limitations/implications Therefore, based on the empirical findings of this study, the authors recommend that the firms need to maintain the optimum board composition and the ratio of debt to share capital as well as developing the stock market to function effectively. Originality/value This study contributes to the existing literature in several ways: (1) the first time that the role of corporate governance is considered in explaining the post-privatization financial performance of firms listed on the Nigerian Stock Exchange; (2) the paper applies a two-step dynamic system GMM estimation technique, proposed by Arellano and Bover (1995) and Blundell and Bond (1998) to control for the serial correlation and heterogeneity, which remain the major weaknesses of the panel data modeling in the literature.

International strategic alliance relationships within the foreign investment decision process

2005 ◽  
Vol 22 (4) ◽  
pp. 399-419 ◽  
Author(s):  
Matthew J. Robson ◽  
Constantine S. Katsikeas
Keyword(s):  
Empirical Research ◽  
Foreign Investment ◽  
Decision Process ◽  
Strategic Alliance ◽  
Investment Decision ◽  
Research Work ◽  
Relationship Development ◽  
Content Type ◽  
Ex Post

PurposeThe purpose of this study is to develop and test a theoretical model of international strategic alliance (ISA) relationship development underpinned by the foreign investment decision process.Design/methodology/approachThe conceptual model demonstrates an ISA investment decision process consisting of three ex ante formation aspects – parent firm top management's general attitude towards alliances, scope of parent's cooperation analysis for the focal alliance, and interfirm collaborative history – and two key ex post relational outcomes – parent's willingness to invest in the alliance business and satisfaction with the relationship. The theoretical propositions were tested among a sample of 94 ISAs using structural equation modelling.FindingsThe results show that top management attitude towards alliances is negatively associated with scope of cooperation analysis, but only where collaborative history exists. Scope of cooperation analysis, in turn, positively influences willingness to invest. And together these factors exert a positive influence on relationship satisfaction.Originality/valueThe ISA literature has devoted significant attention to partner characteristics important in venture formation, as well as to post‐formation partnership management issues. However, there is a dearth of empirical research explaining the role of venture formation aspects in influencing ISA relationship development and success. The study adds to the limited empirical research work on the role of venture formation aspects in influencing ISA relationship development and success. It provides new and detailed insights for business practitioners and academic researchers concerning the behavioural, decision process underlying ISA partnership progression.

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