The present paper analyzes the behavioral relations of major investor groups in the stabilized Korean stock and futures markets after the 1997 Asian financial crisis. Investor groups cannot be classified as positive or negative feedback traders on market returns when both stock and futures markets are considered, which is inconsistent with the results in Ghysels and Seon (2005). Foreign investors and domestic institutions tend to take opposite positions in both markets. The impact of foreign investors on the basis change is significantly negative in the futures market, whereas domestic institutions have a negative relation in the stock market. This supports the view that selling activity of foreign investors in the futures market pulls the futures price down compared with the index value and, consequently, induces the reverse cash‐and‐carry trade of domestic institutions. This relationship, which negatively influenced the Korean economy during the crisis, as shown in Ghysels and Seon (2005), still exists in the Korean financial markets.
In this paper we perform an empirical study to create an optimal investment strategy for the regional deployment of IMT-2000, a next-generation telecommunication service in Korea. We develop a multiple real option model using a binomial lattice, to evaluate managerial flexibility. Managerial flexibility is evaluated specifically in terms of its decision-making ability, when considering two deferral options and a sequential compound option for investment. Using the model, we evaluate the IMT-2000 project and find the optimal investment strategy for the three regions of Korea, depending on the annual market situation.
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