'Stock market performance. When a country’s financial markets are liberalized, global investors bid up the prices of equities previously unavailable to them. After liberalization, stock returns decline, due to reduced capital costs (required returns). These country level results are also confirmed by examining ADR returns, assuming that the ADR listing is liberalization on a small scale.'
This part confuses me:
'After liberalization, stock returns decline, due to reduced capital costs (required returns). '
According to P= D1/(r-g). Where r is required return and P is Stock returns.
as r drops should P not increase????
please help作者: justin88 时间: 2011-7-11 19:13
"after liberalization occurs", stock market returns decline. Required return was 10%, now 7%. Stock price increased as the liberalization occurs, the required return dropped and investors bidded up the price. Now (with prices high), returns will decrease.作者: mcmc 时间: 2011-7-11 19:13
1) We need H-model to value an emerging market;
2) r, the reurn, is the change of price. So as long as r is positive, the price will go up, but perhaps at a lower "speed"(declined r)作者: Windjam 时间: 2011-7-11 19:13
Liberization effect is when you see your passing score in August or whatwhen and you are free again to spend your afterwork time how you want it
