The Fed Interest Rate as the Dominant Factor in Portfolio Equity Flows
Wilman San Marino (a*) Nugraha (b) Ikaputera Waspada (c)

(a*, b, c) Universitas Pendidikan Indonesia
Jl. Dr. Setiabudi No 229 Bandung 40154 Indonesia
*wilmansanmarino[at]upi.edu

Abstract

Drivers of portfolio equity flows to EMCs are classified into push factors namely global conditions that encourage investment EMCs and pull factors that are domestic conditions in EMCs that are attractive to investors. The dominant factor 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. This research is based on descriptive analysis with a literature review approach to explain why the fed interest rate is the dominant factor. The finding are The Fed tracks macroeconomic indicators to capture current growth levels and future potential and adjust policy, one of which is the Fed^s interest rates. In most cases, the central bank is the only expert on economic health information. Therefore, the market will react to the release of policies, and investors will make trading decisions based on these policies.

Keywords: Portfolio Equity Flows- Fed Fund rates- Push Factors, Pull Factors

Topic: Financial Management and Accounting