Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/261208 
Year of Publication: 
2022
Series/Report no.: 
Ordnungspolitische Diskurse No. 2022-3
Publisher: 
OrdnungsPolitisches Portal (OPO), Erfurt
Abstract: 
In the context of the Belt and Road Initiative (BRI), we review selected studies that explicitly or implicitly address the question of whether there occurs synchronization of stock markets between China and the BRI economies. Following this, we examine the extent to which this synchronization of stock markets may be driven by bilateral trade. This question is of particular interest to investors who wish to profit from the BRI while minimizing their risk through portfolio diversification. Our results show that there is plenty of supporting evidence that the stock markets of China and the BRI economies are synchronized, and that synchronization appears to be increasing since the launch of the BRI. We also find that bilateral trade is an important determinant for explaining stock market integration between China and the BRI countries. Based on these results, interregional diversification appears to be less efficient. Further research is needed to determine whether other forms of diversification, such as inter-industry diversification, would be more beneficial.
Subjects: 
BRI
Belt and Road Initiative
Belt and Road Countries
China
Stock Market Synchronization
Stock Market Co-Movement
Stock Market Integration
Trade Integration
Trade Volume
Bilateral Trade
Portfolio Diversification
Investing
Document Type: 
Working Paper

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