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The Effect of Foreign Investors on Security Markets: The Case of Istanbul Stock Exchange

  • Guluzar Kurt Gumus
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    The study aims at analyzing the effect of foreign portfolio investment on Istanbul Stock Exchange (ISE). ISE-100 index, price/earnings ratio, value of share trading and market capitalizion are studied as indicators related with ISE. Foreign portfolio investment is examined as two subgroups: purchases and sales. Unit root tests, cointegration analysis and causality tests are employed in the study, which covers the period of 1997-2007. The results show that there is a long-run relation (cointegration) between purchases and sales of foreign investors, and ISE-100 index, trading volume and market capitalizion. The purchases of foreign investors have a positive effect and the sales of foreign investors have a negative effect on these indicators, and their explanatory power is quite high.

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    File URL: http://www.borsaistanbul.com/datum/imkbdergi/EN/ISE_Review_44.pdf
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    Article provided by Research and Business Development Department, Borsa Istanbul in its journal Istanbul Stock Exchange Review.

    Volume (Year): 11 (2010)
    Issue (Month): 44 ()
    Pages: 58-85

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    Handle: RePEc:bor:iserev:v:11:y:2010:i:44:p:58-85
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