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Surrogate Investment Strategy: The Case Of Spain For Latin America

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  • Rajarshi Aroskar

Abstract

This study analyzes a surrogate investment strategy by using a developed market as a possible candidate for investment in developing markets. It examines the markets of Spain and four Latin American countries: Argentina, Brazil, Mexico and Chile. Both short-run and long-run relationships are analyzed in this paper by using vector autoregression (VAR) and cointegration methodology respectively. It is found that Spain is affected by the Latin American countries in question, but does not affect them. Thus, it has exposure to these markets. This relationship is also maintained in the long run. Thus, Spain serves as an excellent surrogate for investment in Latin America.

Suggested Citation

  • Rajarshi Aroskar, 2007. "Surrogate Investment Strategy: The Case Of Spain For Latin America," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 1(2), pages 99-108.
    • Handle: RePEc:ibf:ijbfre:v:1:y:2007:i:2:p:99-108
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    2. Gokce Soydemir, 2002. "The impact of the movements in US threemonth Treasury bill yields on the equity markets in Latin America," Applied Financial Economics, Taylor & Francis Journals, vol. 12(2), pages 77-84.
    3. Warren Bailey & Kalok Chan & Y. Peter Chung, 2000. "Depositary Receipts, Country Funds, and the Peso Crash: The Intraday Evidence," Journal of Finance, American Finance Association, vol. 55(6), pages 2693-2717, December.
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