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Response Asymmetries in Asian Stock Markets
Journal article   Peer reviewed

Response Asymmetries in Asian Stock Markets

Shuh-Chyi Doong, Sheng-Yung Yang and Thomas C Chiang
Review of Pacific basin financial markets and policies, v 8(4), pp 637-657
Dec 2005

Abstract

feedback trading stock return Asymmetries volatility JEL classification: G15 Asian stock markets
This paper examines autocorrelation and cross-autocorrelation patterns for selected Asian stock returns. Special attention is given to examination of Asian stock returns and the impact on them of the past information. By employing a class of asymmetric specification of conditional mean and conditional variance models, we find the autocorrelation coefficient to be negative for the Japanese market and positive for the rest of the Asian markets studied. Our findings suggest that the Asian markets respond sensitively to the US market, especially on the down side. The asymmetric effects are found to be present in both mean and variance equations. The evidence is consistent with behavior in which investors in Asian markets tend to react more significantly to negative stock news originating from US sources than they do to positive news.

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