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Business and Economics > Investments: Stocks

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  • Type: Journal Issue x
  • Financial Economics: General x
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Cover IMF Working Papers
The Internationalization of China’s Equity Markets
Juan J. Cortina
,
Mr. Maria Soledad Martinez Peria
,
Mr. Sergio L. Schmukler
, and
Jasmine Xiao
China’s equity markets internationalization process started in the early 2000s but accelerated after 2012, when Chinese firms’ shares listed in Shanghai and Shenzhen gradually became available to international investors. This paper studies the effects of the post-2012 internationalization events by comparing the evolution of equity financing and investment activities for: (i) domestic listed firms relative to firms that already had access to international investors and (ii) domestic listed firms that were directly connected to international markets relative to those that were not. The paper finds large increases in financial and investment activities for domestic listed and for connected firms, with significant aggregate effects. The evidence also suggests the rise in firms’ equity issuances was primarily and initially financed by domestic investors. International investors’ portfolio holdings in Chinese equity markets and ownership in firms increased markedly only once Chinese firms’ locally issued shares became part of the MSCI Emerging Markets Index.
Keywords:
equity financing; equity market liberalization; firm investment; foreign investors; international investors; issuance activity; Stock Connect; portfolio holding; internationalization process; unconnected firm; China's equity markets; Stock markets; Stocks; Foreign corporations; Emerging and frontier financial markets; Market capitalization; Global
Cover IMF Working Papers
Asset Price Bubbles: A Selective Survey
Ms. Anna Scherbina
Why do asset price bubbles continue to appear in various markets? This paper provides an overview of recent literature on bubbles, with significant attention given to behavioral models and rational models with frictions. Unlike the standard rational models, the new literature is able to model the common characteristics of historical bubble episodes and offer insights for how bubbles are initiated and sustained, the reasons they burst, and why arbitrage forces do not routinely step in to squash them. The latest U.S. real estate bubble is described in the context of this literature.
Keywords:
WP; discount rate; rate of return; subprime mortgage; fair value; share price; Bubbles; Limits to Arbitrage; Financial Crisis; overvalued asset; long position; price limit; market price; equilibrium price; paper money; growth decrease; internet bubble; bubble asset; Asset bubbles; Asset prices; Housing prices; Real estate prices; Stocks; Europe