Portfolio Investment Funds : Assessing the Impact on Emerging Markets
Although portfolio funds account for only about 5 percent of the capitalization of emerging stock markets, these small infusions of capital, particularly foreign portfolio investment funds, have been responsible for jump starting the development of...
| Main Authors: | , , |
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| Format: | Viewpoint |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/1996/09/441457/portfolio-investment-funds-assessing-impact-emerging-markets http://hdl.handle.net/10986/11607 |
| Summary: | Although portfolio funds account for
only about 5 percent of the capitalization of emerging stock
markets, these small infusions of capital, particularly
foreign portfolio investment funds, have been responsible
for jump starting the development of many of these markets.
The main beneficiaries of this growth have been the local
firms and investors who hold about 90 percent of emerging
market stocks. This Note examines the key role played by the
International Finance Corporation (IFC) in creating the
portfolio funds industry and helping to put countries on the
map for emerging market investors. By improving the
price-earnings ratio, liquidity, and pricing efficiency of
domestic markets, portfolio funds improve firms access to
all equity capital in emerging markets, a factor critical
for business growth in developing countries. The Note also
outlines the benefits that flow to developing country
entrepreneurs and investors as a result of this increased
liquidity the stock market provides. |
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