Relationship between Stock Price and FDI Essay example

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1.0 Introduction

Based on OECD Factbook 2013: Economic, Environmental and Social Statistics, Foreign direct investment defined as cross-border investment by other investors from the economy that had the objective to gain long term interest or benefit from other countries that need capital for development. FDI have divided into 3 categorty such as Horizontal FDI, plaform FDI and vertical FDI. Kimberly state that Foreign direct investment is global economic growth which are apply in all countries such as developing and emerging market countries. The main purpose of FDI that the investor from other countries invests the surplus capital to other countries to gain benefit. At same time, the developing countries will gain more advanatge on
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The stock market such as the bursa Malaysia which able for the listed companies to gather the funds in the large amount which accumulated from the investor for expansion reason. The stock market is defined in the investopedia which are divided into primary and secondary market. The primary market is the new stock issues through the initial public offerings. The secondary market is the place where the intuitional market and individual investor make transaction of share from the investment banks According to Kolodkin(2013), the FDI is major source which helps the countries which have limited of capital or funds for the government expense and receive finance aid from wealthier countries investor. For example, the united state is the world’s largest economy which are consist a lot of investors which have surplus fund to invest in companies and the project internationally. FDI is determined by the investor to invest into the countries based on the country situation and environment. For example, the government of Malaysia wants to attract the investor around the world to invest in Malaysia by giving a benefit such as tax reduced, percentage of share that they can buy.
Feldstein (1995) mentioned that the pattern of international trade is effect by FDI through the transfer of capital and technology from investor. Researcher also believes that multi-national company makes direct investment by using Green field investment to obtain the existing companies’ assets. According to
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