The Relationship between the Movements of Capital Markets in Developed Economies and Their Emerging Market Counterparts in The Asian Paciic Region

Abstract

This research revisits at the relationship between the movements of capital markets in developed  economies  and  their  emerging  market  counterparts  in  the  Asian  Paciic  region using market indices of the American, British, Malaysian, Singaporean, Mainland Chinese, Hong Kong Special Administrative Region (SAR), Indian, Japanese and Australian markets for  the  periods  1997  to  2007.  The  Johansen's  Cointegration  Test,  and  Vector  Correction Model  Test  were  used  to  determine  the  long  term  relationship  between  the  markets.  This study inds that the Asian markets are very much inluenced by the events in the United States rather  than  other  developed  markets.  Of  all  the  markets  being  surveyed,  The  South  East Asian markets are the most sensitive towards events in their own region and regions outside themselves. Mainland China in the long run is not affected by events outside themselves.  ");} // -->activate javascript