A growing number of investors are beginning to invest in a country that is foreign to them. It is indeed increasingly easy to invest abroad. This facilitation has been made possible by technological development which has led to a very strong increase in investment in foreign markets. This upheaval has mainly positive consequences but unfortunately also sometimes negative ones. The example of the Japanese stock market perfectly illustrates the potentially unhealthy consequences of this increase in foreign investors. Most experts agree that foreigners (we are talking about non-Japanese investors here) are responsible for much of the price movement in Japanese stock markets over the past two decades. It has indeed been found that non-Japanese investors buy and sell much faster than Japanese investors. Indeed, the latter always tend to buy stocks with a long-term horizon. The Japanese example is certainly somewhat unique, but the phenomenon is global and impacts all stock exchanges with the possible exception of certain African stock exchanges which remain more hermetic for the moment to foreign flows. In short, there are more and more foreign investors all over the world, and as a result, stock markets around the world are moving more and more in tandem. As Cheol Eun and Sangdal Shim demonstrated thirty-three years ago, one market in particular has the potential to add but unfortunately also and above all to subtract billions of dollars in value from the stocks of other countries in a single daytime. This market is the US stock market. The Chinese stock market today still has less impact than that of the United States, but it is quite possible that in the near future this market will become just as important.
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