RELEVANCE OF FUNDAMENTAL ANALYSIS ON THE BALTIC EQUITY MARKET

Julia Bistrova, Natalja Lace

Abstract


Before making decision how to allocate assets of the equity portfolio the majority of professional and private investors are making their homework, i.e. analysis of the company, which in the most cases takes into consideration financial situation of the company, competitive edge and its market positions. However, due to certain constraints of the emerging markets (e.g. low liquidity, small number of investors) fundamental analysis is not always able to provide value. The relevance of fundamental analysis has been tested within Baltic equity market context by emphasizing the value of such classical ratios as PE, ROE, equity ratio, PB etc. Besides, the interdependence of liquidity and share price performance was checked. The findings of the research prove that fundamental analysis does not add a lot of value to the portfolio performance (exception – PE), while market liquidity influences performance of the share prices in a certain way.


Keywords


Baltic equity market; fundamental analysis; value added; liquidity; inefficiency; share performance

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Print ISSN: 1822-6515
Online ISSN: 2029-9338