Date: 15 Dec 2022 (Thu)
Capital Market Development: China and Asia
- Are Foreign Investors Informed? Trading Experiences of Foreign Investors in China
15 Dec 2022, Thursday
10:00 am – 11:10 am, Thursday (Hong Kong Time, UTC+8)
[ Are Foreign Investors Informed? Trading Experiences of Foreign Investors in China ]
Using a proprietary dataset from 2016 to 2019, the authors find that order flows from foreign investors, facilitated by regulatory liberalization through several channels, present strong predictive power for future stock returns in the Chinese market. Most surprisingly, foreign investors possess the ability to process local firm-level public news, and their predictive power is particularly strong on large price movement days when the implications of firm-level information are likely most pronounced. Evidence also shows that foreign investors have some capability in processing global market-level information. Finally, regulatory reforms that generally relax investment access requirements further improve foreign investors’ predictive power.
Christian T. LUNDBLAD, Richard Levin Distinguished Professor of Finance and Senior Associate Dean for Faculty and Research, Kenan-Flagler School of Business, University of North Carolina at Chapel Hill
Donghui SHI, Professor of Finance (Practice-Track), Fanhai International School of Finance, Fudan University
Xiaoyan ZHANG, Chair Professor of Finance and Associate Dean, PBC School of Finance, Tsinghua University
Zijian ZHANG, PBC School of Finance, Tsinghua University
Dragon TANG, Professor of Finance, HKU Business School, The University of Hong Kong
About the Webinar
Financial market development goes hand-in-hand with economic growth. The development of China's capital markets in terms of size, regulations, capability, and efficiency has been impressive. China may now even lead globally in some dimensions, notably e-payments systems. Yet, China's capital markets are still a work-in-progress facing both generic and unique challenges. Other Asian capital markets have even greater uneven development. Some in advanced Asian economies have acquired globally acclaimed reputation and capabilities while various regulatory and structural weaknesses dwarf others. Corporations and investors have been inclined to arbitrage cross-border regulatory and developmental gaps; so the very uneven status of capital markets across Asia is a policy issue for the governments in the entire region and perhaps globally. Analysing the positive and negative lessons in the functioning of Asia's capital markets, and identifying reforms and applications of technology that could further improve Asian capital markets' allocation efficiency, financial inclusion, and forewarning against reforms that might cause problems can benefit practitioners, policymakers and researchers, and can contribute significantly to overall prosperity.
The ABFER and the University of Chicago's Becker Friedman Institute China (BFI-China), in collaboration with National University of Singapore (NUS) Business School, Shanghai Advanced Institute of Finance (SAIF), The Chinese University of Hong Kong (CUHK) Department of Economics, CUHK-Shenzhen and Tsinghua University PBC School of Finance (Tsinghua PBCSF), hope to provide a virtual network to benefit researchers, policymakers, and practitioners from Asia and beyond.