The Impact of Stock Market Performance on Foreign Portfolio Investment in China
Muhammad Afaq Haider,
Muhammad Asif Khan (),
Shamila Saddique and
Shujahat Haider Hashmi
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Muhammad Afaq Haider: School of Economics, Shanghai University, Shanghai, China,
Shamila Saddique: Huazhong University of Science and Technology, Wuhan, P.R. China
Shujahat Haider Hashmi: Capital University of Science and Technology, Islamabad, Pakistan.
International Journal of Economics and Financial Issues, 2017, vol. 7, issue 2, 460-468
The research is aimed at investigating the impact of stock market performance and inflation on foreign portfolio investment (FPI) in China. For this purpose, time series quarterly data from 2007Q1 to 2015Q4 is used. On the basis of stationarity results, auto regressive distributed lag model is used to examine the impact of the stock market prices and inflation on FPI. The results show that there is significant positive impact of stock market performance on the FPI, whereas inflation is found to be negatively associated with the FPI. The study also reveals that some historical events like Asian financial crisis of 2008, and the Shanghai Composite Stock Index crash of 2015, significantly affected the FPI in China. The investors should consider these two factors while investing in foreign financial markets.
Keywords: Stock Market Performance; Inflation; Foreign Portfolio Investment; China (search for similar items in EconPapers)
JEL-codes: F21 G11 O16 P45 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2017-02-60
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