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Trading Better Versus Making More: Evidence from an Emerging Market

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  • Aliaa Bassiouny
  • Eskandar Tooma

Abstract

Using transaction data from Egypt, we examined the controversy over which investor—domestic or foreign—has superior trading performance in emerging markets. We account for informational and behavioral differences across investors by classifying them by origin and type and comparing their performance in trade execution versus profitability. Domestic institutions execute trades at the best prices with the greatest advantage against foreign institutions. This advantage is reduced when foreign institutions focus on large firms and trades. Profitability analysis revealed, however, that domestic investors accrue significant losses against foreign investors, suggesting that trading better does not necessarily translate into making more money.

Suggested Citation

  • Aliaa Bassiouny & Eskandar Tooma, 2017. "Trading Better Versus Making More: Evidence from an Emerging Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(8), pages 1779-1795, August.
  • Handle: RePEc:mes:emfitr:v:53:y:2017:i:8:p:1779-1795
    DOI: 10.1080/1540496X.2016.1180511
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