Modern information and communication technologies are of help. Any investor anywhere in the world can in no time update his view of - let’s say - the correctness of the markets' expectations as to the future path of ECB interest-rate policy. If his opinion differs from the markets’, that is, if he perceives opportunities for arbitrage, he will rearrange his portfolio.
What is new about this process - besides technology? International portfolio diversification is no longer a privilege of institutional investors. Today, nearly everybody’s portfolio is internationally diversified. International portfolio diversification may occur in its direct form, for example, in holding shares in companies located in different countries. It may otherwise come in its indirect form: foreign direct investment.