This study examines the relation between the sentiment of noise traders and stock prices in ten Post-Communist East European stock markets: . The results suggest that, in general, the sentiment of noise traders, proxied by the consumer confidence index, seems to have no impact on stock prices at a market wide level. represents that belief about futures cash flows and investment risks which is not justified by information. According to Chang et al. (2009) , the sentiment is the investor opinion

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... n future cash flows and risks that is usually affected by emotion. Some papers (Brown and Cliff, 2004; Wang et al., 2006) analyzed the relation between sentiment and returns using both the level and the change of sentiment. Wang et al. (2006) indicate that the exact form in which the sentiment of noise traders will influence returns is not clear ex ante. Firstly, if noise traders are affected by sentiment changes, then sentiment changes should drive returns. Secondly, if noise traders only trade when the sentiment is very high or low comparative to previous levels, then actually the sentiment levels should influence returns. Moreover, Brown and Cliff (2004) argued that, from a theoretical point of view, both levels and changes in sentiment may influence returns. If the sentiment decreases from very bullish to bullish a positive return can be expected, since the sentiment is still bullish, but, because the sentiment has dropped we can also expect a decline in return. All in all, if noise traders base their trading decisions on sentiment, level or change, we can expect that it might predict asset returns. However, if we ask which are the determinants of sentiment we can expect that previous returns could influence, in fact, the sentiment (Wang et al., 2006) . Earlier findings (Brown and Cliff, 2004; Wang et al., 2006; Canbaş and Kandir, 2009), suggest that returns cause sentiment rather than the other way around. Most studies are focused on developed markets, such as that of the United States or European countries. The number of studies focusing on developing markets is limited and to the best of my knowledge none of the studies investigated the impact of sentiment on stock prices in the context of Post-Communist East European stock markets. Therefore, using international data which have not been used in the past provides an out-of-sample test for earlier findings. In this paper, I examine the relation between the sentiment of noise traders and stock returns for ten Post-Communist East European stock markets namely, . The main objective of this paper is to observe if the sentiment influences stock prices and if this effect is correlated across stocks such that it affects the aggregate markets. This is an important issue, since if the sentiment is correlated across stocks, then its effect cannot be diversified away holding large portfolios of stocks (Charoenrook, 2005) . Further, De Long et al. (1990) showed that the unpredictable nature of noise trader sentiment creates a risk in asset prices that deters arbitrageurs from aggressively betting against it. Using Granger causality test, the results suggest that, for most of the stock markets, only the stock returns seem to have forecasting ability for the changes in sentiment of noise traders and not vice versa. Therefore, these results do not support the hypothesis that the sentiment of noise traders affects stock prices at a market wide level.