Companies Identified as Having the Greatest Returns to Capital in Emerging Markets During a Worldwide Pandemic

Abstract

The COVID-19 pandemic of the year 2020 resulted in high unemployment, business closings, property loss and decimation of individual wealth, disruption of global supply chains, and illness and deaths everywhere, but most intensely in countries classified as emerging markets. However, during this year, cash flow from investors in established markets to emerging markets has been of immense magnitude. While many companies, in emerging markets, reported very high risk-adjusted rates of return, many others reported so low rates during this period. This study aims to establish a unique profile of risk-return characteristics of the companies in emerging markets that have constantly reported the highest risk-adjusted returns to total capital during the pandemic. The statistical results of our study suggest that such unique profile can be used as a tool to forecast which companies, in such markets and during such disturbances in the future, will maintain high returns to capital providing an invaluable tool for investors, investment counselors and financial researchers tasked to determine firm’s intrinsic value in such an environment.