Abstract:

As a result of the economic dimensions of globalization, the financial liberalization, the boundaries between markets have risen, and with the acceleration of capital movements, the excess of savings in developed countries have been directed to developing countries in the form of foreign investments. Foreign investments may be made to physical investments made to the owners of assets in another country as a direct foreign investment or to financial assets with a maximum return at a minimum risk level as portfolio investments. The study examined the relationship between foreign direct investments and portfolio investments and index return. The most rapidly developing and called the E7 countries of Brazil, China, Indonesia, India, Mexico, Russia and Turkey in the period 2005-2016 foreign investment and stock exchange index data have been evaluated using panel data analysis. As a result of the analysis, a meaningful and negative relationship between direct foreign investment and index revenue was identified, while a meaningful and positive relationship between foreign portfolio investments and index revenue was identified. In the E7 countries, foreign portfolio investments have a great importance in increasing stock index revenue and investors prefer short-term investments instead of long-term investments.

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