Stock returns and foreign investment in Brazil

Luciana Reis, Roberto Meurer and Sergio Da Silva

MPRA Paper from University Library of Munich, Germany

Abstract: We examine the relationship between stock returns and foreign investment in Brazil, and find that the inflows of foreign investment boosted the returns from 1995 to 2005. There was a strong contemporaneous correlation, although not Granger-causality. Foreign investment along with the exchange rate, the influence of the world stock markets, and country risk can explain 73 percent of the changes that occurred in the stock returns over the period. We also find that positive feedback trading played a role, and that the market promptly assimilated new information.

Keywords: stock returns; foreign investment; Brazilian economy (search for similar items in EconPapers)
JEL-codes: E44 F21 G12 (search for similar items in EconPapers)
Date: 2008
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Journal Article: Stock returns and foreign investment in Brazil (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:23028

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