Inviting excess volatility? Opening up a small stock market to international investors

Article Abstract:

The impact of net purchases of stocks by foreign investors on prices in a small stock market is only temporary, with the price impact reverse within three months. Foreign investors' net purchases of stocks seem like noise trading, rather than informational trading, on the average, apparently creating some excess volatility in the market. This was gleaned from a study of the effect on asset prices of opening up a small stock market to international investors by examining the relationship between a price index of Swedish stocks and the net purchases of Swedish stocks by foreign investors.

Foreign investments, Prices and rates

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Political stock markets and unreliable polls

Article Abstract:

The performance of the political stock market (PSM) in Sweden for a major national referendum was investigated. The referendum focused on Sweden's membership in the European Union and was held on Nov 13, 1994. The results showed that the PSM was able to predict the outcome of the referendum compared to polls which were unable to generate reliable information. However, the PSM cannot be used as an accurate forecaster of political events because it is subject to manipulation which would distort its predictions.

Political aspects, Referendum, Referendums, Election forecasting

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Does increased international influence cause higher stock market volatility?

Article Abstract:

A correlation exists between world market sensitivity and stock market volatility. An analysis of the Swedish stock market reveals that stock market volatility increases as foreign influence on the stock market becomes greater. Domestic and world markets fall simultaneously as world market undergoes into a period of high volatility. Such condition, which usually lasts for about five months, increases the sensitivity of a domestic market to news from the world market.

Research, Capital market, Capital markets

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