Drivers of Portfolio Equity Flows to Emerging Market Countries Wilman San Marino (a*) Nugraha (b) Ikaputera Waspada (c) Maya Sari (d)
a) Universitas Pendidikan Indonesia
Jl Dr Setiabudi No 229 Bandung 40154 Indonesia
*wilmansanmarino[at]upi.edu
b) Universitas Pendidikan Indonesia
Jl Dr Setiabudi No 229 Bandung 40154 Indonesia
nugraha[at]upi.edu
c) Universitas Pendidikan Indonesia
Jl Dr Setiabudi No 229 Bandung 40154 Indonesia
ikaputerawaspada[at]upi.edu
d) Universitas Pendidikan Indonesia
Jl Dr Setiabudi No 229 Bandung 40154 Indonesia
mayasari[at]upi.edu
Abstract
In recent decades, international diversification has increased the portfolio investment flows to Emerging Market Countries (EMC). This paper examines why investors diversify in EMC and what drivers of portfolio investment flows. This paper is a descriptive analysis with a literature review approach. The finding is that international investors are interested because EMC offer higher returns than countries of origin, with less risk. Drivers of portfolio investment flows to EMC are classified into push factors namely global conditions that encourage investment EMC and pull factors that are domestic conditions in EMC that are attractive to investors. The main driver that has the most influence on the portfolio equity flows to developing countries is the Fed Fund rates which is a part of push factors.
Keywords: portfolio investment flows, international diversification, push factors, pull factors, U.S. interest rates
