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Abstract

This paper examines the factors affecting U.S. portfolio flows to Southeast Asia in the last decade or so. It adopts a capital flow model and uses a panel data approach to determine the potential effects of global and country-specific factors on U.S. portfolio equity and bond flows to four Southeast Asian countries - Indonesia, Malaysia, Philippines, and Thailand. It finds that both global and country- specific factors are equally important in motivating U.S. portfolio equity flows to the region. On the other hand, U.S. portfolio bond flows to Southeast Asia are largely determined by a global factor. Using a time-series approach, this paper finds that both global and country-specific factors significantly influence U.S. portfolio equity flows to Indonesia and Malaysia while such flows to the Philippines and Thailand were mainly due to global and country-specific factors, respectively. Moreover. both global and country-specific factors significantly influence U.S. portfolio bond flows to the Philippines while only a country-specific factor is found to be significant in Thailand.

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