Research On Home-bias And International Diversification Of Chinese Investors

With the intensification of financial globalization,the increase of international securities investment and the continuous free flow of capital,China's capital market pays more and more attention to the development of internationalization.Therefore,many scholars have conducted relevant researches on international diversified investment.According to the securities portfolio theory,a diversified portfolio can reduce the risk of the assets it holds.Since the securities markets of different countries are facing relatively different macro environments,international diversified investment can further diversify the risks.However,some scholars' researches in recent years show that investors prefer to buy domestic stocks and are unwilling to invest in foreign financial assets in the actual investment process.At present,more relevant studies at home and abroad focus on the existence of this phenomenon,and few scholars pay attention to whether the index simulation can replace the international investment through domestic diversification.Therefore,this paper innovatively studies the phenomenon of " home-bias " and tests whether this phenomenon is the rational choice result of investors by constructing a simulated investment portfolio.This article first eight regional scope of QDII fund investment is used to measure investors' presence of home bias phenomenon in our country,the innovative use of 11 industry as well as the Shanghai and Shenzhen 300 index,the CSI 500 index,the hang seng index to simulate based index 45 countries,and through the Sharpe ratio and Mvar model to compare portfolio and foreign index of risk and return.The main conclusions are as follows :(1)there is a local preference among Chinese investors,who are more inclined to invest in the domestic market when foreign investment is allowed;(2)China's diversified investment can only be simulated to foreign indexes at a low level,and domestic diversified portfolio cannot replace foreign indexes for investment;(3)the return performance of the foreign basic index is better than that of the simulated investment portfolio.The "home-bias" phenomenon of Chinese investors is not the result of rational choice.The research results of this paper are beneficial to enrich the research of related fields in China,and also have important practical significance to the policy-making of national and corresponding financial institutions.