Foreign Portfolio Investors Before and During a Crisis
NBER Working Paper No. 6968
Different categories of foreign portfolio investors in Korea have differences as well as similarities in their trading behavior before and during a currency crisis. First, non-resident institutional investors are always positive feedback traders, whereas resident investors were negative feedback (contrarian) traders before the crisis but switch to be positive feedback traders during the crisis. Second, individual investors herd significantly more than institutional investors. Non-resident (institutional as well as individual) investors herd significantly more than their resident counterparts. Third, differences in the Western and Korean news coverage are correlated with differences in net selling by non-resident investors relative to resident investors.
Published: Kim, Woochan and Shang-Jin Wei. "Foreign Portfolio Investors Before And During A Crisis," Journal of International Economics, 2002, v56(1,Jan), 77-96.