Impact of the Electronic Trading on the Stock Prices of Jordanian Listed Companies

The development of economies has been significantly hampered by inadequate financing. The introduction of securities exchanges is considered as a key strategy for improving access to financing for organizations. The introduction of electronic trading systems in these markets is meant to enable them take advantage of technology and improve access to financing for listed companies. However, the system may have the adverse effect of increasing the level of stock price volatility. A quantitative study using data collected from the ASE is undertaken here. The increase in price volatility for the industrial stocks in the ASE was not statistically significant. The mean returns for the shares were similar in the period before and after the introduction of the system. The findings indicate that the electronic system increases the level of transparency in the market and improvement in efficiency is not accompanied by a change in the price volatility. It was expected that the change in market liquidity and portfolio flows would influence price changes in the market. This was not the case and it may be an indication that the level of returns in the market did not significantly increase.The market returns for the stocks of industrial listed companies are calculated. Using independent samples tests, the returns are evaluated for a period of 5 years before and after the introduction of the system.

The Nonlinear Effect of Uncertainty in Portfolio Flows to Mexico

Economic uncertainty is considered not only one of the main causes of recessions, but also a major obstacle to economic recovery. Recent studies find that significantly high levels of uncertainty could have a non-linear impact that amplifies the response of macroeconomic variables. The objective of this document is to analyze the presence of this impact on portfolio flows to Mexico. The results show that episodes of high uncertainty have a greater negative impact on bond and stock flows than those found under a linear VAR. Furthermore, it is observed that the effect is more persistent for bond flows. Finally, high uncertainty leads to a marked depreciation of the nominal exchange rate, a contraction in economic activity and a fall in the stock index.

Capital Markets, COVID-19 and Policy Measures

The COVID-19 pandemic and associated policy responses triggered a historically large wave of capital reallocation between markets and asset classes. Using high-frequency country-level data, this paper examines if and how the number of COVID cases, the stringency of the lockdown, and the fiscal and monetary policy response determined the dynamics of portfolio flows. Despite more dominant global factors, we find that these domestic factors played an important role, particularly for emerging markets and bond flows, contributing to a global wave of reallocation to safer asset classes. Our results indicate that rising domestic COVID cases had a strong positive effect on portfolio flows, which responded to an increase in financing needs in affected economies. Lockdown and fiscal policy measures also led to an increase in portfolio flows; however, evidence from the CDS market suggests that the increase in flows was dominated by supply forces, reflecting investors' preference for stronger policy responses. In contrast, we find that interest rate cuts led to a decline in portfolio flows as investors searched for higher yield. Finally, we show that COVID policy responses also affected countries' exposure to the global shock and that pre-COVID macroeconomic conditions, such as lower sovereign risk and higher trade openness, contributed to larger flows during the COVID episode.