international stock market (3)

because stock transaction of the cross-border type have been increasing rapidly ,it is possible that movements of stock prices across countries will tend to become increasingly similar to each other .this co-movement might arise because of the general result that occurs when markets become less separated or segmented and arbitrage occurs between them .however ,stock markets can differ in this co-movement respect from usual markets because of the central role of expectations in stock markets and the resulting potential volatility that can emerge from sudden swings in those expectations .if the prices of stocks in market A soar while those in market B languish ,investors may shift from B to A and drive prices further up in A and down in B because of expectation that A will continue to rise and B will continue to stagnate .On the other hand ,the soaring prices in market A might yield the result that investors will expect them to fall and thus will shift the composition of their portfolios toward stocks in market B.In this case ,the prices in the two markets might converge and ,with regular such behavior ,might never have diverged to a great extent in the first place - any rise in one market would cause a switch to the other market ,causing a rise there.