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The Impact of Stock Market Performance on Foreign Portfolio Investment in China

Author

Listed:
  • Muhammad Afaq Haider

    (School of Economics, Shanghai University, Shanghai, China,)

  • Muhammad Asif Khan

    (School of Economics, HUST, China,)

  • Shamila Saddique

    (Huazhong University of Science and Technology, Wuhan, P.R. China)

  • Shujahat Haider Hashmi

    (Capital University of Science and Technology, Islamabad, Pakistan.)

Abstract

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.

Suggested Citation

  • Muhammad Afaq Haider & Muhammad Asif Khan & Shamila Saddique & Shujahat Haider Hashmi, 2017. "The Impact of Stock Market Performance on Foreign Portfolio Investment in China," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 460-468.
    • Handle: RePEc:eco:journ1:2017-02-60
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    Cited by:

    1. Patricia Lindelwa Makoni, 2020. "Foreign Portfolio Investments, Exchange Rates and Capital Openness: A Panel Data Approach," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 100-113.
    2. Ahmed Al Samman & Mostafa Kotb GabAlla, 2020. "Impact of Country Risk and Return on FPI," International Journal of Economics and Financial Issues, Econjournals, vol. 10(6), pages 57-68.
    3. O. K. Adeleke, 2023. "FDI inflows and stock market development in Nigeria," Journal of Economic Policy and Management Issues, JEPMI, vol. 2(2), pages 19-30.

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    More about this item

    Keywords

    Stock Market Performance; Inflation; Foreign Portfolio Investment; China;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages

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