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- Title
Which Local Stocks are Preferred by Foreign Investors? Evidence from an Emerging Market.
- Authors
AARON, AURELIUS; WIRYONO, SUDARSO KADERI; KOESRINDARTOTO, DEDDY P.
- Abstract
Using the panel probit and logit approaches, this study reveals new evidence related to the stock preferences of foreign investors in an emerging stock market based on their complete transaction history during 2012-2015. Specifically, the results of this study suggest that when building their portfolio, foreign investors are segmenting their investment activities in the Indonesia Stock Exchange by having a high chance of not choosing local stocks with low price-level, small market capitalization, and poor fundamental value (indicated by stocks classified into the development board by the regulator). Furthermore, it is also suggested that although there is a weak evidence of foreign investors prioritize local stocks operating in the financial industry also trade, services, and investment, generally, both the stock industrial classification and trading volume are not influencing their stock picking decision. Finally, this study confirms that the above findings remain the same after several robustness checks.
- Subjects
INDONESIA; EMERGING markets; INVESTORS; STOCK exchanges; MARKET capitalization; FINANCIAL services industry
- Publication
International Journal of Economics & Management, 2019, Vol 13, Issue 2, p435
- ISSN
1823-836X
- Publication type
Article