Determinants of Foreign Investment in the Brazilian Stock Market

Walter Gonçalves Junior () and William Eid Junior ()
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Walter Gonçalves Junior: FGV-EESP
William Eid Junior: FGV-EAESP

Brazilian Review of Finance, 2016, vol. 14, issue 2, 189-224

Abstract: The purpose of this paper is to identify determinants for foreign portfolio investment in the Brazilian stock market. From the viewpoint of the investors who have already allocated their resources in Brazilian Market, it was found that periods of greater local liquidity and lower correlation with developed markets promoted their activities (buys and sales); the Brazilian country risk (EMBI Br), domestic and external interest rates and recent past performance of the domestic market also showed as significant determinants for additional buys. For net inflows into the local stock market, as robust determinants were found the performance of developed markets and the domestic prime interest rate; the development of BM&F-Bovespa Stock Exchange, crisis environments, the recent Brazilian investment grade and the local diversification (in relation to a developed market) would be particularly relevant to the dynamics of foreign portfolio inflows in Brazil.

Keywords: foreign investment; determinants; Investment Decisions; International Finance (search for similar items in EconPapers)
JEL-codes: F65 G11 G12 G14 G15 N26 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:brf:journl:v:14:y:2016:i:2:p:189-224

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