Foreign Portfolio Investors Before and During a Crisis

29 Pages Posted: 26 Apr 1999 Last revised: 12 Oct 2010

See all articles by Woochan Kim

Woochan Kim

Korea University Business School; European Corporate Governance Institute (ECGI); Asian Institute of Corporate Governance (AICG)

Shang-Jin Wei

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); International Monetary Fund (IMF); Tsinghua University - School of Economics & Management

Multiple version iconThere are 2 versions of this paper

Date Written: February 1999

Abstract

Different categories of foreign portfolio investors in Korea have differences as well as similarities in their trading behavior before and during a currency crisis. First, non-resident institutional investors are always positive feedback traders, whereas resident investors were negative feedback (contrarian) traders before the crisis but switch to be positive feedback traders during the crisis. Second, individual investors herd significantly more than institutional investors. Non-resident (institutional as well as individual) investors herd significantly more than their resident counterparts. Third, differences in the Western and Korean news coverage are correlated with differences in net selling by non-resident investors relative to resident investors.

Suggested Citation

Kim, Woochan and Wei, Shang-Jin, Foreign Portfolio Investors Before and During a Crisis (February 1999). NBER Working Paper No. w6968. Available at SSRN: https://ssrn.com/abstract=151709

Woochan Kim

Korea University Business School ( email )

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Seoul, Seoul 136701
+822-3290-2816 (Phone)
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European Corporate Governance Institute (ECGI) ( email )

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Belgium

Asian Institute of Corporate Governance (AICG) ( email )

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Sungbuk-gu
Seoul, 136-701
Korea, Republic of (South Korea)

Shang-Jin Wei (Contact Author)

Columbia Business School - Finance and Economics ( email )

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New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Centre for Economic Policy Research (CEPR)

London
United Kingdom

International Monetary Fund (IMF)

700 19th Street, N.W.
Washington, DC 20431
United States

Tsinghua University - School of Economics & Management

Beijing, 100084
China

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