The impact of liberalization and regionalism upon capital markets in emerging Asian economies

Abstract

This paper examines the trend towards regionalism upon stock market returns for a sample of Asian countries. We find that stock markets are becoming regionally integrated at a faster rate than globally. This finding reflects the growing co-operation between Asian countries. This study focuses upon Indonesia, Malaysia, the Philippines, South Korea, Taiwan and Thailand. These markets suffered severe contagion effects in relation to the Asian financial crisis that occurred during 1997. In addition, this study reports on the significant economic and political events that occurred in Asian economies from 1980. This study concludes that increases in liberalization coupled with stronger 'regionalism' in South East Asia contributed to the Asian financial crisis in 1997, in addition the structural weaknesses in their financial systems. Policy setters may consider reducing the amount of intra-regional dependence in order to reduce the impact of financial crises and improve stability of the financial system and re-examine the correct sequencing of both economic and financial liberalization.

Indonesian Stock Market’s Dynamic Integration with Asian Stock Markets and World Stock Markets

“…Many countries in Asia region change, especially regarding virtual technology which also expands to the stock markets and it also contributes to the economy. Further, a research conducted by Bilson (2000) also found that the integration of stock markets in Asia region under the study is increasing after the liberalization. Furthermore, financial integration can benefit countries in the region and contribute to the financial development of ASEAn countries whose economics are still far from the developed ones.…”

“…the emergence of new technologies and the increasing integration of stock markets around the world lead to the allocation process of stock markets beyond national boundaries (Connoly & Wang 1998). In line with this, Bilson (2000) states that the movement of stock markets in the developing countries and the stock markets in developed countries become more closely related. the forces that drive globalization such as the increasingly rapid global communications, the infrastructure of transportations, and homogenization and the gathering of consumer demands are further enhanced by the reduction of barriers to capital investments in emerging markets.…”

“…In this case, the expected yields must be determined by using both global and local communication sources of risks. Bilson (2000) stated that the ongoing liberalization process which supports great changes also occurred in stock markets in Asia, such as in Indonesia, Malaysia, Philippines, South Korea, taiwan, and thailand. Many countries in Asia region change, especially regarding virtual technology which also expands to the stock markets and it also contributes to the economy.…”

Capital Market Integration In Some Asean Countries Revisited

“…Oppose to the integrated capital market is segmented capital market. A market is considered as segmented when it has low interrelation with other capital markets (Bilson, 2000;Robiyanto, 2017).…”

Get ready for an ASEAN stock market

“…We will also work closely with the ASEAN Capital Market Forum, comprising representatives from ASEAN's securities regulators, to achieve this objective. Bilson, Hooper, and Jaugietis (2000) found that the regional integration among stock markets in Malaysia, the Philippines, South Korea, Taiwan, and Thailand is faster than their integration with the global markets. Sarkar and Li (2002) pointed out that U.S. investors have been slow to acquire foreign stocks, despite economists' claims that diversification is beneficial.…”