The Importance of Dividend Policy in Frontier Markets
Analysts should pick a significant set of fundamentals when forecasting stocks’ returns. In particular, they cannot apply the same model to all kind of markets. Companies’ specific characteristics that best describe returns for Frontier Markets differ from those for Emerging and Developed Markets. Dividend policy variables have a key role in explaining stocks returns in Frontier Markets, while the level of debt and profitability seem to have a significant role in Emerging and Developed Markets.
This work further highlights why Frontier Markets have to be considered as a wholly separated asset class from both Emerging and Developed Markets, and, above all, that these markets require specialized professionals able to perform specific analysis to forecast stocks’ returns in the best way possible.
