ECONOMIC INTEGRATION AND INVESTMENT OPPORTUNITIES: A STUDY ON ASEAN+3 COUNTRIES

This paper aims to investigate the investment opportunities in ASEAN+3 economies following the market liberalization in 1980s and 1990s. The estimation process is executed by using stock market indices and by employing Johansen Cointegration, VECM and Impulse response function. Member economies of ASEAN+3 are segmented based on income level in order to observe the market dominance of developed economy on that of developing economies. The dynamic findings indicate the followings: 1) the capital market liberalization improves the market transparency, thus to the favor of the foreign investment, 2) The diversification benefits of portfolio investment in APT regional financial markets squeezed, 3) both the higher and lower income economies have equal investment opportunities, and finally, 4) the financial markets of ASEAN+3 become excellent investment region. This study offers great policy implications for the regional policy makers and both foreign and local investors.