Apple’s triumphant announcement last week that it has crossed the $700 billion market capitalization mark bodes well for companies such as Foxconn Technology Group, a Taiwanese multinational and manufacturer of components for Apple and other global electronic companies.
Foxconn, which makes, among others, parts for the iPhone 6 and the iPhone 6 plus, has reportedly been struggling to keep up with their production. Over the years, it has also received much negative press about the treatment of its workers. Nevertheless, the strength of the demand for the Apple products, coupled with Apple’s success, is a huge positive for investors in companies like Foxconn and underscores the increased importance and strength of emerging market companies, particularly in Asia, and the prospect for greater dividends going forward.
Apple’s success, is a huge positive for investors in companies like Foxconn and underscores the increased importance and strength of emerging market companies, particularly in Asia, and the prospect for greater dividends going forward.
According to a recent study on global dividends by Henderson Global Investors, the Asia-Pacific region and Taiwan and China in particular are leading the way when it comes to dividend increases. China, in fact, accounted for almost half of the total emerging market dividend growth in 2014, with a 14% increase for this year, according to Henderson’s Global Equity Team.
“We expect to see strong dividend growth out of China, as while growth is slowing, it is still predicted to be above 6%,” a member of the team wrote in an email. “In China, measures are being taken to improve corporate governance and credibility, and this should translate into dividend increases.”
Within the emerging markets, improved corporate governance has been one of the most important factors and greatest contributors to increased dividends, according to Peter Kohli, CEO of DMS Funds. In countries like India, Indonesia and The Philippines, there’s been a marked improvement in governance standards, Kohli said, and this has translated to better corporate performance and higher dividends.
Vietnam is also working in this area and so is China.
But governance aside, Kohli also believes that the growing middle class in many emerging market nations has a keen role to play in increased corporate dividends.