The Fed Interest Rate as the Dominant Factor of Portfolio Equity Flows

Wilman San Marino (), Nugraha and Ikaputera Waspada
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Wilman San Marino: Universitas Pendidikan Indonesia
Nugraha: Universitas Pendidikan Indonesia
Ikaputera Waspada: Universitas Pendidikan Indonesia

A chapter in Proceedings of the 7th Global Conference on Business, Management, and Entrepreneurship (GCBME 2022), 2024, pp 67-71 from Springer

Abstract: Abstract The drivers of the equity portfolio flow to Emerging Market Countries (EMCs) are divided into factors, i.e., the global environment that supports EMCs investment and the attraction factors that are the domestic environment and EMCs attract those invest money. The main factor that has the greatest impact on the portfolio balance going to emerging countries is the Fed Funds rate, which is one of the most motivating factors. This research is based on descriptive analysis and literature review methods to explain why the Fed interest rate is so important. In conclusion, the Fed analyzes macroeconomic indicators to understand the current growth rate and potential in the future and adjust policies, one of which is interest rates. The Fed is an expert on economic information. Therefore the market will react to policy publications, and investors will make trading decisions based on those policies.

Keywords: Portfolio Equity Flows; Fed interest rates; Push Factors; Pull Factors (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-234-7_8

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DOI: 10.2991/978-94-6463-234-7_8

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