Stock market liberalization and emerging market country fund premiums

This paper provides an analysis of the effects of financial market liberalization on emerging market country fund premiums, share prices, and net asset values. The evidence shows that the listing of new country funds resulted in a 8.8% decrease in the premiums on the old funds during the 4 months beginning with the announcement of the new funds. Relaxation of investment restrictions, although it has a positive impact on the net asset values has no net effect on the fund premiums. These findings support the predictions of the theoretical models of international asset pricing and country fund pricing.