Globalization and Investment Opportunities: A Cointegration Study of Arab, U.S., and Emerging Stock Markets

Financial Review, Vol. 43, No. 4, pp. 591-611, November 2008

21 Pages Posted: 16 Oct 2008

See all articles by Said Elfakhani

Said Elfakhani

American University of Beirut - Olayan School of Business

Mahmoud Arayssi

Lebanese American University

Hanin A. Smahta

affiliation not provided to SSRN

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Abstract

Using a sample of Arab, U.S., and emerging stock markets from 1997 to 2002, this study is designed to determine if international diversification is still possible despite growing globalization and the consequent integration among various stock markets. Our results show that within Arab markets, Kuwait cointegrates individually with Jordan, Tunisia, and Saudi Arabia and between Tunisia and Jordan, thus offering investors possible continued diversification opportunities. On the other hand, only Jordan, Kuwait, and Morocco are cointegrated with the U.S. general market index, implying that these markets offer a probable substitute for those investing in the U.S. markets.

Suggested Citation

Elfakhani, Said and Arayssi, Mahmoud and Smahta, Hanin A., Globalization and Investment Opportunities: A Cointegration Study of Arab, U.S., and Emerging Stock Markets. Financial Review, Vol. 43, No. 4, pp. 591-611, November 2008, Available at SSRN: https://ssrn.com/abstract=1281708 or http://dx.doi.org/10.1111/j.1540-6288.2008.00204.x

Said Elfakhani (Contact Author)

American University of Beirut - Olayan School of Business ( email )

Bliss Street
Beirut 1107 2020
Lebanon

Mahmoud Arayssi

Lebanese American University

P.O.Box 36
Chouran-Beirut 1102 2801
Byblos
Lebanon

Hanin A. Smahta

affiliation not provided to SSRN ( email )

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