Stock returns and foreign investment in Brazil

• Autores: Luciana Reis, Roberto Meurer, Sergio Da Silva
• Localización: Applied financial economics, ISSN 0960-3107, Vol. 20, Nº. 16-18, 2010, págs. 1351-1361
• Idioma: inglés
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• Resumen

  • 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% 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.