The foreign investors' behaviours during the COVID-19 pandemic in emerging market

Abstract

International capital inflows contribute a critical part to macroeconomic stability and financial market growth for an emerging economy. As the COVID-19 pandemic has triggered unprecedented chaos in the financial markets recently, this study attempts to explore the current foreign investors� behaviours and their impacts on the stock market performance in an emerging market. This study found long-term relationships between foreign investors� trading behaviours and stock market returns. However, the COVID-19 pandemic is distinctive from previous financial crises regarding its impacts on foreign investors� trading behaviours. Responding to shocks of the COVID-19 pandemic, foreign investors have changed their trading behaviours dramatically and somehow lost their role as a trend leader to domestic retail investors in the market.