Investment Practices Research Articles

Eligible Juridical Person Investors in ICSID Arbitration

An investors eligibility is a prerequisite for International Centre for Settlement of Investment Disputes (ICSID) tribunal to acquire jurisdiction over a case. There is no definite conclusion on whether an entity is an eligible investor, often leading to disagreement. In current international investment practice, arbitration tribunals usually consider the definition of investor in the bilateral investment treaties concluded by the parties to the dispute and use it as one of the bases for determining the investors international status. Since the identification of juridical person investors is a controversial issue in practice, this essay will analyze the criteria for ICSIDs decision in the Tokios Tokels v. Ukraine as an example and examine the issue of pierce the corporate veil to explore the path to resolve related disputes.

Transformative investment: New rules for investing in sustainability transitions

Closing the financial gap for promoting systemic socio-economic transformations to achieve sustainability requires both a substantial increase in investment levels and a qualitative change in investment strategies. In this Perspective, we elaborate on this claim and discuss why existing investment approaches that aim to make positive contributions to sustainability are unlikely to foster the systemic transformations needed for sustainability. Qualitative change means changing the current rules that guide investment practices and we outline a new set of rules that should guide transformative investment. These rules are based on the well-established socio-technical sustainability transition theory and the recent development of a theory of deep transitions. We explain why these transformative investment rules offer a promising alternative base for assessing investment opportunities and monitoring progress toward the multi-system changes required to achieve a socially just deep transition to sustainability.

EXPLORING INVESTOR ENGAGEMENT WITH CRYPTOCURRENCY INVESTMENTS IN SRI LANKA

This research paper explores the dynamics of investor engagement in cryptocurrencies within the context of Sri Lanka, a country marked by economic distress and growing interest in the digital economy. Cryptocurrencies, characterized by their decentralized nature and potential for high returns, have gained significant traction globally. This study employs an exploratory research methodology to delve into the demographic details, investment behaviour, and strategies of cryptocurrency users in Sri Lanka. Through convenience sampling, the study identifies and surveys 35 cryptocurrency users. The research findings reveal that the cryptocurrency market in Sri Lanka is predominantly male dominated, with the majority falling within the 21-30 age group and holding Bachelors degrees. Participants are primarily employed in the self-employed or private sectors. Their investment horizons vary, with a notable percentage investing for 3-5 years, followed by 1-2 years and less than a year. A significant portion of respondents has experienced fraud within the cryptocurrency space, emphasizing the need for cautious investment practices. Investment levels among participants vary, with the largest proportion having invested more than 500,000 LKR. However, a substantial number of investors have portfolios exceeding 1,000,000 LKR, highlighting the diversity of investment sizes. Profitability in cryptocurrency investments is mixed, with a substantial proportion achieving significant profits, while others report substantial losses. This underscores the inherent risk in cryptocurrency investments, with a notable percentage of participants experiencing financial setbacks. KEYWORDS: Cryptocurrency, Investments, Profitability, Financial setbacks.

THE ROLE OF BUSINESS AND ECONOMIC PROTOCOL IN THE ETHICS OF INTERNATIONAL ECONOMIC RELATIONS

This paper extensively explores the pivotal role of business protocol in international economic relations, delving into its historical evolution, contemporary significance, and the challenges it encounters within the dynamic global business environment. The study emphasizes the necessity for nuanced intercultural communication and highlights the adaptability of business protocol to diverse situations. Article discusses the issues of diplomatic and economic protocol and ethics, shedding light on the intricate interplay between international relations and economic activities. Diplomatic protocol, with its established conventions and rituals, plays a crucial role in shaping the discourse between nations, fostering cooperation, and mitigating conflicts. Economic protocol, on the other hand, governs the conduct of nations and businesses in the global marketplace, influencing trade agreements, investment practices, and financial interactions. The examination of these protocols within the framework of ethics becomes imperative as it explores the moral dimensions of diplomatic and economic engagements. Ethical considerations in diplomacy encompass matters of respect, transparency, and adherence to international law, aiming to promote peaceful coexistence and equitable collaboration. Similarly, in the realm of international economics, ethical principles guide decisions regarding resource allocation, corporate responsibility, human rights protection, and the fight against corruption. By delving into the ethical aspects of diplomatic and economic protocols, the article seeks to contribute to a deeper understanding of the values that underpin international interactions. It emphasizes the importance of fostering ethical practices in diplomacy and economic relations, ultimately striving to create a global landscape that values fairness, responsibility, and mutual respect. The current significance of business protocol is underscored in light of its strategic importance in facilitating effective communication and collaboration between nations and businesses. The challenges faced by business protocol in the modern global business arena are thoroughly scrutinized, addressing issues such as cultural diversity, technological advancements, and the need for constant adaptation. In summary, this comprehensive analysis contributes to a nuanced understanding of the multifaceted role of business protocol in international economic relations, shedding light on its historical roots, contemporary significance, and the evolving challenges it faces in the globalized business landscape.

ESG rating confusion and bond spreads

This paper investigates the influence of ESG rating confusion on bond spreads, an area of growing importance in sustainable finance. Despite the recognition of ESG rating confusion, their effects on the bond market remain less explored. Leveraging a corporate bond pricing model, we reveal that ESG rating confusion widens the bond spread. Analyzing data from China, we find that both primary and secondary bond markets are affected, with the latter experiencing a more significant impact. Our study emphasizes the role of information asymmetry and investor preferences, outweighing the issuer’s financial position in driving these effects. Furthermore, we identify environmental and weighting inconsistencies as crucial sources of ESG rating confusion. The findings underscore the necessity of a standardized ESG rating system to enhance investor confidence and support ESG-related project financing. A cohesive rating approach among agencies correlates with narrower bond spreads, thereby fostering bond market efficiency and promoting ESG investment practices.

The impact of ESG factors on Russia’s banking sector

An important condition for the successful incorporation of ESG principles in banks’ activity is reflecting the data on the implementation of environmental, social and governance activities in the reporting for stakeholders. The paper aims to build the models of ESG factors’ impact on the banking industry. Methodologically, the study rests on the theories of ESG banking and green (responsible) finance and uses the methods of dialectical and economic statistical analysis. By means of correlation analysis the authors reveal causal relationships and establish the ESG factors affecting the banking sector of the Russian Federation. The obtained data point to the importance of green finance within the framework of the sustainable environmental and economic development of the banking industry. The study does not fully confirm the thesis that following the ESG principles will lead to an increase in the profitability and efficiency of the banking sector: only social factors directly influence the performance of the banking sector, while environmental factors have an inverse effect, and there is no relationship with the governance factors. The findings can be useful while incorporating ESG principles in the regulation of financial markets and in investment practices. This will enable the organisations in the banking sector to form an ESG-based strategy, control the factors affecting the financial sustainability of the baking industry, manage ESG risks based on an extensive dialogue with stakeholders, and win goodwill.

An innovative high-frequency statistical arbitrage in Chinese futures market

The primary use of futures is hedging risk. Traders in the spot market can hedge certain risks through the futures market. With the development of the futures market, the arbitrage transactions around futures have attracted increasingly attention. The aim of this paper is to establish an innovative and unique pairs trading framework, and use it to test the effectiveness of China's futures market. The framework for pairs trading is based on cointegration test, Kalman filter and Hurst index filtering. We use the data of 47 commodities with relatively good liquidity in the Chinese commodity futures market. We apply the representative index of China's commodity futures market, "Wenhua Commodity Index" as the benchmark, to evaluate the performance of the strategy and compare it with the benchmark model. This study found that, according to the pairs trading framework, after considering transaction costs, the cumulative return in the sample reached 81%, the cumulative return out of the sample was 21%. It is worth noting that the out-of-sample maximum drawdown achieved excellent results of no more than 1%. In the same period, trading the Wenhua Commodity Index with a "buy and hold" strategy achieved a gain of 31%, but with maximum drawdown reached 15%. The values of our paper are, first it proves that Chinese commodity futures market is not a weak-form efficient market, because technical analysis based on machine learning could obtain excess returns. Second, this research combines the theory and practice of statistical arbitrage, which also provides guiding significance for investment practice.

Association of Redlining and Natural Environment with Depressive Symptoms in Women in the Sister Study.

Improving mental health is recognized as an important factor for achieving global development goals. Despite strong evidence that neighborhood greenery promotes better mental health, there are environmental justice concerns over the distribution of neighborhood greenery. Underlying these concerns are present-day consequences of historical discriminatory financial investment practices, such as redlining which was established by the U.S. Federal Home Owners' Loan Corporation (HOLC) in the 1930s. The impacts of redlining on environmental and health disparities have been researched extensively. However, the influences of redlining on the associations between neighborhood environment and health outcomes have not been fully assessed. The aim of this study was to examine whether associations between residential tree cover and depressive symptoms vary across areas subject to HOLC practices. Depressive symptoms were defined by the 10-item Center for Epidemiologic Studies Depression Scale collected during the period 2008-2012 for 3,555 women in the Sister Study cohort residing in cities subject to HOLC practices across the United States. HOLC rating maps were obtained from the Mapping Inequality Project, University of Richmond, with neighborhoods graded as A (best for financial investment, green), B (still desirable, blue), C (declining, yellow), and D (hazardous, red-known as redlined). Tree cover within and from residences was estimated using 2011 U.S. Forest Service Percent Tree Canopy Cover. Mixed model using climate zone as the random effect was applied to evaluate the associations with adjustments for potential covariates. Analyses were stratified by HOLC grade. Tree cover was significantly higher in neighborhoods with better HOLC grades. A 10% increase in tree cover was associated with reduced odds of depressive symptoms for the full study population, with adjusted odds ratios (AORs) of 0.93 [95% confidence interval (CI): 0.88, 0.99], and 0.91 (0.85, 0.97) for and buffer, respectively. Across HOLC grades, the strongest associations were observed in redlined neighborhoods, with respective AORs of 0.72 (95% CI: 0.52, 0.99) and 0.63 (95% CI: 0.45, 0.90) for and buffer. Findings support a remediation strategy focused on neighborhood greenery that would address multiple public health priorities, including mental health and environmental justice. https://doi.org/10.1289/EHP12212.

PORTFOLIO MANAGEMENT AND SYSTEMIC RISK IN THE AGE OF ARIFICIAL INTELLIGENCE

Artificial intelligence has emerged as a transformative force with profound implications for diverse domains, including finance and portfolio management. This paper delves into the multifaceted impact of AI on portfolio management and the dynamic landscape of systemic risk. The proliferation of AI is fueled by rapid advancements in computational capabilities, the abundance of extensive datasets, and breakthroughs in AI algorithms. It offers unparalleled accuracy, speed, and practical applicability, revolutionizing traditional paradigms. Globalization and AI applications have amplified systemic risks on a global scale, necessitating a reevaluation of risk management strategies. Conventional portfolio theories, like Modern portfolio theory, have historically emphasized the diversification of idiosyncratic risks while downplaying systemic risk. The comprehension and effective mitigation of systemic risks are paramount to preserving financial stability, particularly in the aftermath of systemic crises such as the 2007 2009 financial meltdown. AI's transformative potential extends beyond risk management, reshaping the labor landscape in asset management. Forecasts anticipate substantial job reductions in the field, prompting professionals to embrace adaptability and acquire new skill sets. This paper examines AI's integration into portfolio management, shedding light on the intricate interplay between AI, systemic risk dynamics, and investment practices. In conclusion, the integration of AI into portfolio management heralds an era of unparalleled opportunities and complex challenges. AI's capacity to process vast datasets, enhance pattern recognition, and refine predictive modeling has reinvented investment methodologies. However, this paradigm shift comes with inherent risks, especially pertaining to systemic instability. Identifying, understanding, and mitigating these risks is pivotal for sustaining financial market. Collaborative efforts among industry experts, regulators, and AI developers are instrumental in fostering responsible and sustainable AI integration within financial markets. As AI continues to exert its influence, professionals must remain adaptable and acquire new competencies to navigate the evolving financial landscape effectively. The future of portfolio management lies in harnessing AI's capabilities while safeguarding against potential pitfalls, ultimately steering the financial sector toward greater efficiency and resilience.

Analysis of Green Liability on Environmental Damage--State Responsibility in International Investment Law

Long before the birth of international environmental law, disputes over transboundary environmental damage have long existed in global trade and investment. Since the promulgation of the Rio Declaration on Environment and Development, with the arrival of the Period of Liberalization in international investment, the environmental issues involved in cross-border investment have skyrocketed, and international judicial bodies such as the International Court of Justice and the International Tribunal for the Law of the Sea have adjudicated a number of disputes over transboundary environmental damage. These post-Rio transboundary environmental damage disputes are characterized by complex afflictions, wide scope and serious damage. At this stage of adjudication, international judicial institutions have not developed relatively stable standards, principles and systems for ex post facto remedies for transboundary environmental damage. From the perspective of state responsibility, this paper analyzes the issue of transboundary environmental damage theoretically and practically, and explores the attribution, standards, and requirements of responsibility for cross-border environmental damage arising from international investment and the formation of the ex post facto remedy system, in order to provide reference for the establishment of a more sound and refined remedy mechanism of transboundary environmental damage in future international investment practice.

Strategies to Strengthen Savings and Loan Cooperatives in Indonesia

This writing aims to describe, analyze, and identify the legal issues of savings and loan cooperatives and the strategies that the government can undertake to support and enhance the role of savings and loan cooperatives in the Indonesian national economy. This study adopts a normative legal research method. The research approach used includes legislative and conceptual approaches. The legal materials utilized in this writing comprise primary and secondary legal sources. The technique employed to gather legal data is document or library research. Furthermore, the legal materials are analyzed using descriptive, evaluative, and argumentative techniques. Based on this research, it is found that the obstacles faced by Savings and Loan Cooperatives in their development are the lack of quality human resources, weak supervision of these cooperatives due to the absence of a specialized independent body responsible for overseeing Savings and Loan Cooperatives, loss of cooperative identity due to the prevalence of illegal investment practices disguised as Savings and Loan Cooperatives, and the increasing number of default cases by these cooperatives, indicating a deviation from the cooperative principles of kinship. This is caused by some individuals being easily lured by business entities that promise ease and high returns on investment in cooperatives. The strategies that the government can implement to address these obstacles include strengthening the supervision of savings and loan cooperatives by establishing a specialized body with the authority to oversee them or designating the Financial Services Authority as an independent institution with the power to supervise savings and loan cooperatives. Additionally, forming a Cooperative Deposit Insurance Agency is suggested to provide protection and legal certainty.

DOES GREEN FINANCE SUPPORT TO REDUCE THE INVESTMENT SENSITIVITY OF ENVIRONMENTAL FIRMS?

This study aims to examine the financing cash flow sensitivity into the firm investment of Environment Sensitive Firms (ESFs). To improve the robustness of our analysis, we implement cluster regression to analyze the 300- firms listed on Shenzhen Stock Exchange. The findings of this study indicate that high-ESFs have more financing cash flow volatility in firm investment than low-ESFs. The firms can reduce this volatility by integrating green finance with their financing cash flows. Green finance helps to implement sustainable investment practices and reduces investment volatility by providing the solution to societal issues. It also assists to generate stable cash flows, lower investment risk, and a better governance structure.

Socially responsible investment practices and implementation approaches: A case study of listed extractive firms in Ghana

Socially responsible investment practices and implementation approaches: A case study of listed extractive firms in Ghana

Экономические интересы и риски участников операций с цифровыми финансовыми активами

Based on empirical materials on the investment practice of the Russian financial market, the article examines the economic interests of participants in operations with digital financial assets as well as the risks to which they are exposed in these investment relations. The authors identify coinciding and immanent to each of the participants in the operations target intentions that the participants are interested in implementing. The participants are the Bank of Russia, the investor, the operator of the information system in which the issue of digital financial assets is carried out, the recipient of the investment, and the bank of the operator of the information system. The risks specific to each of these participants are disclosed and analyzed, and the authors substantiate proposals for the prevention and relief of the identified risks likely when conducting operations and digital financial assets. The dynamics of the admission of information system operators and operators of the exchange of digital financial assets to the financial market are being studied, and the composition and volume of their operations for the issuance of digital financial assets for the period 2022–2023 are being critically assessed. The dynamics of the number of recipients of investments (persons issuing digital financial assets and the total volume of attracting resources from investors through the issuance of digital financial assets) are investigated. The dynamics of the growth of the number of individual investors in the Russian financial market are considered using the example of their client accounts with positions on securities; proposals are made on the need to adopt a targeted federal program to train citizens in behavior in the field of Internet investment. A methodological matrix of interests-risksmeasures has been formed for participants in operations with digital financial assets, which provides for the allocation of overlapping and immanent interests-risks-measures and discloses mandatory preventive measures. Which should be applied by each of the participants in operations with digital financial assets to ensure timely and full execution of settlements between them and stable turnover of digital financial assets in the investment segment of the Russian financial market.

PENYELUNDUPAN HUKUM INVESTASI ASING LANGSUNG DI INDONESIA

Investing activities to do business in a territory of the Republic of Indonesia carried out by foreigners or what is called Foreign Investment, this research is focused only on the BOPUNJUR region (Bogor-Puncak-Cianjur) which is a tourism area that is widely known both from within and from outside country, its beauty leads tourists to visit and even many investors to invest in the BOPUNJUR area. The purpose of this study is to find out and analyze the problems of foreign investment in the Bopunjur area and also the integrated concept of foreign investment in the Bopunjur area. The method used is normative juridical research with statutory approach and conceptual methods. The research results obtained are that in the Foreign Direct Investment Practices carried out by foreign investors in the BOPUNJUR Region that in its implementation there is a legal smuggling namely the practice of Nominee, dummy, and strawman.

MAIN TRENDS AND PERSPECTIVES OF THE DEVELOPMENT OF THE REGULATORY LANDSCAPE OF RESPONSIBLE INVESTMENT IN THE WORLD

The development of the responsible investment market is an undoubted trend that has swept the world in recent years and is only gaining strength. In connection with this, the question arises of the appropriate regulatory regulation of this sector of activity, which will help ensure the transparency and efficiency of the activities of investors. This contributes to the formulation of the purpose of this study, which consists in conducting an analysis of existing trends in the regulatory regulation of responsible investments and outlining possible prospects for their development. In order to achieve the set goal, the present state of development of responsible investment is analyzed in the work in accordance with the data of the UN Principles for Responsible Investment project. The results indicate a positive growth trend in the number of regulatory instruments of responsible investment, although certain imbalances depending on the geographical region have been identified so far. This indicates an increased focus on responsible investing, with governments and other concerned regulatory bodies actively developing rules and frameworks to promote responsible investment practices. At the same time, China, Germany, Italy and Spain are the most active countries in terms of regulatory regulation of responsible investment. Analysis of the main types of regulatory instruments of responsible investment also shows their uneven development. The most common today are the mandatory instruments of disclosure of ESG information for investors, corporate disclosure of ESG information and integration of ESG information for investors. This is due to increased transparency and reporting requirements, as well as the requirements of most regulators to disclose ESG-related risks, opportunities and performance. The obtained results made it possible to confirm the assumption about the need to unify the regulatory landscape of responsible investment in the world for further progress in this sector and to achieve the Sustainable Development Goals.

Clean Energy Stocks: Resilient Safe Havens in the Volatility of Dirty Cryptocurrencies

Green investors have expressed concerns about the environment and sustainability due to the high energy consumption involved in cryptocurrency mining and transactions. This article investigates the safe haven characteristics of clean energy stock indexes in relation to three cryptocurrencies, taking into account their respective levels of “dirty” energy consumption from 16 May 2018 to 15 May 2023. The purpose is to determine whether the eventual increase in correlation resulting from the events of 2020 and 2022 leads to volatility spillovers between clean energy indexes and cryptocurrencies categorized as “dirty” due to their energy-intensive mining and transaction procedures. The level of integration between clean energy stock indexes and cryptocurrencies will be inferred by using Gregory and Hansen’s methodology. Furthermore, to assess the presence of a volatility spillover effect between clean energy stock indexes and “dirty-classified” cryptocurrencies, the t-test of the heteroscedasticity of two samples from Forbes and Rigobon will be employed. The empirical findings show that clean energy stock indexes may offer a viable safe haven for dirty energy cryptocurrencies. However, the precise associations differ depending on the cryptocurrency under examination. The implications of this study’s results are significant for investment strategies, and this knowledge can inform decision-making procedures and facilitate the adoption of sustainable investment practices. Investors and policy makers can gain a deeper understanding of the interplay between investments in renewable energy and the cryptocurrency market.

Multi-agent model based proactive risk management for equity investment

Developing and applying new artificial intelligence (AI) techniques in finance has become popular and one of the growing areas. Although many studies focus on return prediction and do not pay much attention to price formation, revealing its mechanism is essential in risk management, particularly in proactive risk management for investment to improve the performance. Thus, this paper introduces a novel multi-agent model, which is able to explain how agents’ portfolio rebalances determine the market price dynamics to clarify the price formation by applying a state space model.The technical novelty is the effective integration of state space modeling and fuzzy logic into a multi-agent model with four types of typical investors and their fuzzy trading strategies. By using the estimated unobservable fund flows of each trader in the model, this work proposes a new proactive warning signal. As a result, the signal improves both the risk and return of the investment in the Japanese and United States equity markets. Our findings indicate that the agents’ estimated fund flows driving asset prices help us to avoid a market crash, reduce the risk and improve the return in investment practice.

Problems in the Application of Law in the Indra Kenz Fraudulent Investment Case

Fraudulent investment, also known as fake investment, is one of the most serious problems in Indonesia. One of the most famous cases of fraudulent investment is the case of Indra Kenz, a young entrepreneur who ran a fraudulent investment business that defrauded thousands of people. This article aims to analyze Indra Kenz's fraudulent investment case from a legal perspective using the normative juridical research method. Data is obtained from literature study and analysis of documents related to Indra Kenz's case. The results of the analysis show that Indra Kenz's fraudulent investment practices violated a number of laws and regulations in Indonesia, such as Law No. 8 of 2010 on the Prevention and Eradication of Money Laundering. In addition, the practice also violated fundamental legal principles, such as the principles of justice and trust. Indra Kenz's case is a valuable lesson for the public and the government to be more vigilant against fraudulent investment practices. The government needs to improve supervision and provide strict sanctions for fraudulent investment actors to prevent similar cases from occurring in the future.

The Role of International Engagement in Greening China’s Belt and Road Initiative

ABSTRACTAs China’s Belt and Road Initiative (BRI) has emerged as the largest public financier for energy infrastructure projects worldwide, concerns about the environmental and climate impacts of such projects have led to mounting international pressure on the Chinese government to ‘green’ its investment practices. This paper examines the understudied role of international engagement, and of specific international actors, in greening China’s BRI. We propose two discrete models of engagement which serve as a means of understanding the role that international actors have played in greening China’s BRI: (1) through direct engagement that influences individual project outcomes; and (2) through indirect engagement that shapes China’s broader policies and investment practices. We also identify factors that have constrained the role of international influence, including the absence of an influential Chinese international development agency. Finally, we propose opportunities for international engagement with China regarding its overseas investment practices.